Unqualified, unlicensed telemarketers urged Australians to switch about $678 million worth of investments, largely superannuation savings, into risky schemes over an 18-month period, a review by the Australian Securities and Investments Commission found.
Telemarketers, also known as lead generators, use social media, cold calling and other online tactics to identify vulnerable consumers, whom they introduce to financial advisors.
The advisors then pull their investments out of regulated accounts and into newer, riskier ones, which lead generators often claim will have higher returns.
It makes significant money for the financial advisors, who raked in $9.8 million in up-front advice fees from clients and a further $4.5 million in ongoing fees, the federal watchdog found.
The practice has come under scrutiny in recent weeks after Shield and First Guardian managed investment schemes collapsed, leaving more than 12,000 Australians without their life savings.
Many of them joined the funds after being contacted by a lead generator.
The watchdog's report found many financial licensees did not have good measures in place to stop the practice from happening.
Super Consumers Australia chief executive Xavier O'Halloran said the largely unregulated practice showed greed had gripped the market at an industrial scale.
"Good advisers don't need to cold call people to get clients," he said.
"This isn't about helping Australians get better retirement outcomes.
"It's about dodgy operators finding ways to get their hands on your super and charge you as much as possible."
ASIC commissioner Alan Kirkland said financial service providers' licences were at risk if lead-generating methods were used.
"ASIC's work in recent years has exposed how business models involving slick sales tactics to convince people to switch their super can expose Australians to serious financial harm," he said.
"Consumers should not feel pressured or misled when making important financial decisions."
The crackdown effectively banned lead generators from being involved in advising on super investments, Association of Superannuation Funds Australia's chief executive, Mary Delahunty, said.
"Licensees need to know what is happening at every stage of the advice process," she said.
More than 7600 customers were gained through lead generation for 15 licensees between January 2025 and June 2026.
The review found five licensees did not have controls in place that prohibited high-risk superannuation fund changing.
A further four licensees were operating businesses that had some features of high-risk superannuation switching.
"The poor approach to oversight taken by some licensees is unacceptable, particularly considering the scale and volume of business generated from these arrangements," Mr Kirkland said.
"Commercial incentives must not come at the expense of consumers."
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