AIOFP AND THE TRIAD FOR PROSPERITY

This should interest all particularly with the Minister calling for an ‘industry solution’ to the Shield and First Guardian fiascos.

EXECUTIVE SUMMARY. Most think the darkest days for our Profession were the 2014–2022 O’Dwyer/Hume/Frydenberg period with the resultant LIF, FASEA, ridiculous Compliance and Grandfathered Revenue ban legislation impacting heavily on the business model of most practices.

It can now be unfortunately argued that the 1/1/2026 Education ‘Cliff’ and the potential affects of the CSLR going forward eclipses this period.

Although the origins of these issues can be sourced back to the Liberal Party, CSLR was legislated under former Minister Jones’ tenure. You may recall Mr. Jones making a reference to the ‘hot mess’ left by the Liberals in 2022, it can also be argued that Mr. Jones left an even hotter mess for Minister Mulino to deal with in 2025.

This mess is now immeasurably negatively compounded by the behaviour of less than 1% of the Advice Profession with the SHIELD and FIRST GUARDIAN incidents. The unfortunate timing of this fiasco corresponds with our Profession needing the ALP Cabinet to agree with extending the Education ‘cliff’ timeframe and amending CSLR when the Professions credibility in Canberra has been severely eroded.

The Advice Profession has clearly 2 choices: cower and hope it goes away with time and ‘good behaviour’; or stand up and seek solutions to our predicament for the other 99% of Professional Advisers who add great value to their client’s financial position. 

It is time for all Financial Advisers to finally act as one unified political force, push back where necessary, stand up for Consumers and protect the integrity of our Profession.

We strongly suggest supporting these 3 Strategies:

TRIAD 1 – STANDING UP FOR CONSUMERS. The Profession must put in place actions that will assist with getting the SHIELD/FIRST GUARDIAN victims their savings back. This will keep the focus on the role ASIC, Trustees, Managers, Auditors, Custodians and Research House play in the MIS space and how they are responsible for not detecting fraud and allowing product failure/fraud to occur. We cannot let this narrative change by these stakeholders spinning the blame onto others – they must be held accountable for their conduct.

Credit must go to Macquarie for delivering a settlement, but pressure must be put on the 3 Trustee entities who are yet to offer a settlement. Equity Trustees, Diversa and Netwealth are obviously watching and hoping the CSLR will sort it out – that we cannot let happen. A CSLR solution will mean the Financial Advisers will have no choice but to pass the cost back to their clients which is a cumbersome and unfair outcome.

Considering the Netwealth group owners received both trustee and platform fees [not to mention many hundreds of millions of revenue and billions of FUM over the past 40 years from the Advice Profession] they should be prepared to assist the Financial Advisers in our hour of need.

We are encouraging all Advisers to boycott their platform until they agree to an acceptable settlement. This will send a clear message to the entire market that key stakeholders must be accountable for their own conduct and Financial Advisers will stand by their clients and consumers. In addition, any products with Equity or Diversa Trustees involved should be similarly treated.

TRIAD 2 – A CSLR BREAKTHROUGH. We are pleased to advise you that whilst AIOFP Head of Technical Services Lionel Rodrigues has been completing his PHD in Legislative Instruments at Deakin University, his supervising Associate Professor Dr Mark Bowler-Smith has had a close look at the CSLR Legislation and believes it is flawed and unconstitutional. Attached is his initial summary after Lionel briefed Dr Bowler-Smith.

The key issues are the AFCA determinations are coming from a non judicial body that permits no procedural fairness or natural justice for Financial Advisers; as we all know AFCA is fundamentally a ‘kangaroo court’. This Separation of Powers is clearly unconstitutional in the view of the Cambridge PHD educated Dr Bowler-Smith, who has also pointed out that Australia are way out of step with Canada, USA, UK and New Zealand with similar schemes. Former Minister Hume confirmed in the past that they did not seek information from other countries when structuring CSLR – no doubt that would have upset Hume’s intention of ‘culling’ the Profession.

The AIOFP has advised Minister Mulino and Shadow Pat Conaghan of the circumstances and our intentions of challenging CSLR in the High Court if fair amendments are not applied.

TRIAD 3 – PROTECTING ADVISER INTEGRITY. The Advice Profession needs to immediately advise their local Federal member of the isolated circumstances surrounding the SHIELD/FIRST GUARDIAN fraud by emphasising less than 1% of the Profession are involved but we are assisting with the recovery. We also need to advise of the 1/1/2026 Education Cliff and CSLR ramifications for Consumers and the Advice Profession if these issues are not addressed.

SUMMARY

The Sheild/First Guardian issue could not have happened at a worst time. Whilst Minister Mulino is considering his response to CSLR and the Education Pathway dilemma, our Professions integrity has been besmirched in Canberra. To make matters worse, the ALP Cabinet is dominated by the Left where some outspoken critics of our Profession exist.

This predicament is not even considering what damage the general media coverage of the victims has done to our reputation.

To help redeem our position the Profession needs to be seen to doing something positive about assisting victims to get their savings back. We must boycott the commercial activities of the 3 Trustees who are yet to settle and then communicate with Canberra and all Federal Politicians about the Shield/First Guardian circumstances.

The CSLR legal opinion gives us hope that it can be challenged if it is not amended in its current form. It is pleasing to know that Dr Mark Bowler-Smith is not a lifetime Academic, he worked for a global Law practice out of London and was also a London-based practicing Financial Adviser for 2 years during the 1990’s.