Hello and welcome to the Australians Money Puzzle podcast.

I'm James Kirby.

Welcome aboard everybody.

Am I imagining this or is there suddenly again a lot of bad behavior, bad actors as they call them, sweeping through the investment markets, not just share markets, but property markets as well.

We mentioned on the show just on Tuesday we had Sam Price and he was telling this extraordinary story about how influencers social media financial I don't want to say the word advisors, but financial operators who assume the mantle of advisors on social media had been luring investors into single districts basically within certain cities Brisbane and Melbourne, and of what Sam described as pump and dumb, basically that they lie them all into the one suburbs, the suburb goes up, and then of course it's all over and reality hits and these suburbs don't actually turn out to be good investments.

I had always thought of influencers and advice issues around share market, but it can be property as well.

We also have, of course, the emerging scandal ever growing scandal around the trust Gargent Group and issues around SMSF commencements.

We're big SMSF fans on the show, but we always say they're not suitable for everybody.

My guest today is someone who's right across all this.

He is not only across it, but he has the power i'd like to think sometimes at least to change what's going on.

It's Alan Kirkland, and he is the ACIC Commissioner with particular oversight on consumer affairs.

How are you Allen?

Excellent, James, Really great to be here with you today.

Very nice to have you on the show, and good to have someone like you on the show.

As I've mentioned to you earlier, we offer mention money smart as a place to start for investors and to get a grips on the basics.

Our listeners probably would think that they're sort of step up from that level, but often that's for dangerized as you'll probably tell us pretty soon.

Just quickly on that, just on that first point I was talking about, and I know, folks, the reason Alan is on the show is he wants to tell us a few things about what's going on at ACIC and what they're doing and some of the areas that they want to warn us about.

But on that whole thing about finfluencers.

It seems like it never goes away.

Is how do you guys actually move in on that.

It seems like a perennial problem.

This is an old problem dressed up in a new fashion on social media.

I think, oh, it is a key concern for us.

I mean we, of course, I only have the power to interven if they're actually if people are actually giving advice in relation to financial products or services.

So there are lots of forms of property investment that don't fall into that category.

Can't necessarily take action if people are giving advice about property investment, but with what they're doing is recommending that people invest in a financial product or service, then it's quite likely that they're providing financial advice and that requires a license.

And we've been really active against influencers.

Earlier this year we took action coordinated action with a range of regulators around the world as part of a global week of action against influencers that involved search warrants and arrests and some other jurisdictions.

In Australia, we identified a range of influencers who we felt were giving financial advice and we've reached out to them and thus the second time we've done that, and we have actually seen a number of them changed their practices after being contacted by ACIC because I think for them it came as a I hope it came as a bit of a shock and really made them think about the fact they might be breaching the law.

So we'll have a bit more to say about that, I think earlier in the new year, because we're just sort of wrapping up that latest round of action.

But I can assure your listeners that it's a key concern for us because to give financial advice in Australia you need to be appropriately qualified, and you need to have a license or be authorized by a licensee, and we will take action where we find people who aren't complying with those requirements.

Oh the sure we make a socially when we have a question and answer session, I make it very clear that it's not advice.

I say this all the time, it's information.

But how does the average intelligent, every day investor de called what's advice and what isn't advice?

And has it become more difficult with now media or social media?

Actually, the test in the law around what's financial advice is pretty simple.

When you strip it back.

It really comes down to whether somebody is making a recommendation about a particular financial product.

So if somebody is suggesting that you invest in something, that's effectively advised, so you should always have it your I guess your senses up.

If somebody's talking up a particular investment option, and if they're encouraging you to invest in it, you should be checking out whether they've actually got a license or whether they're somehow authorized by an existing licensee.

And that's important because if you get financial advice from somebody who's appropriately licensed, there are important consumer protections that come with that.

So they've got to be a member of Africa the Dispute Resolution Body, they've got to have appropriate arrangements for dealing with complaints you make to them and for providing compensation if something goes wrong.

So you do get some important protections by engaging with somebody who's appropriately licensed.

So you should always ask that question if they're suggesting you make an investment.

Obviously there are some exemptions for genuine media organizations or which I think is part of what you were referring to in those earlier comments, James, but outside programs like this, if somebody on social media or somewhere else is telling you to invest.

You should always be.

Wary and how would I check?

So somebody's quite convincing, how would I actually check that they are licensed?

Yeah, so there is a register that we published.

We've got registers of licensees and particularly of financial advisors who are authorized to give financial advice.

And the easiest way into them is in fact via the money smart website that you mentioned.

So if you go to money smart dot gov dot au look at the financial advice section, you'll be able to find access to the register there and you can enter the name of an individual and you'll be able to find out whether they're authorized to give financial advice.

Okay, Now, a lot of our listeners maybe is very roughly coming up on half of them have an SMSA for self managed super fund or aspire to have one.

And there is issues again yet again, and something of a flashpoint, I suppose in this area in the first guaragean scandal which is emerging just now where there's many investors caught with their super in scheme, shall we see, which is it's unfolding as we speak.

But what's really surprising is there's an estimated billionaire, so that could be lost here.

And it's got a lot of big names in it, right, So a lot of big names were in one way or another entangled in this and people were very poorly advised.

But what strikes me Alan is is that it seems that's at the heart of the financial system.

Is there what can you do to protect people from getting losing money or risking losing money when an affair emerges where it ostensibly looks feasible or reasonable because well known household names are mentioned in passing by these operators.

It is one of the questions that is probably our biggest priority in ethic at the moment, I mean across the Shield and First Guardian Color, which had some really similar elements.

I mean, we've got a whole bunch of investigations underway.

We've already launched a range of litigation.

We've i think been in court around forty five times in the past year or so, and we've got about forty people working on these.

So it's one of our biggest priorities as a regulator, and one of the ways that one of the key things we've done is an immediate priority is to try and protect investor funds.

So when we were alerted to the fact that there might have been I guess some inappropriate behavior going on in the management of those funds that people invested in by their super one of the first things we did once we had sufficient evidence was to go to court to get asset freezing orders to stop any more money disappearing.

We eventually got receivers and liquid ators appointed who can secure whatever assets are there and try to make sure they're appropriately distributed, and ideally there's many of those funds as possible to go back to investors, so that's an important part of it.

One of the challenges is sometimes these things come to our attention a bit too late for us to save all of the assets, so we're still working through the process to see how much can go back in relation to investors in those two schemes.

But the other thing we've done is to try and find other methods to get compensation for investors, So, particularly in relation to the shield Master Fund, which is the other one I mentioned, we did get an important agreement recently from mcquarie, which is one of the big names I assume you're referring to.

It is that they will make things right for the people who invested via the McQuary platform in the Shield master funds.

So for those investors who did so via McQuary, they will be receiving effectively well kind of refunds.

All that there will be payments made back into their super too make up for the loss of the veil of their original investment.

So that's an important action that we pursued because this is people super and we know that it's very distressing for people who've based losing it.

The Mcquarie payment promises such as three hundred million or so, and it would appear to be a very good development and it appears to be voluntary as such.

Are you hopeful that other key players will follow in their footsteps?

We would like to see them do.

So.

There's one other superannuation trustee that we've taken action against in relation to Shield at this stage, and that is Equity Trustees, the superannuation entity run by Equity Trustees, and in that case we are seeking court orders that they provide remediation to the customers affected.

So I'll have to see how that works through the courts, but it demonstrates that's one of the key things we're pursuing and then in the bigger picture, James, we want to do everything we can to stop this happening again, and that involves includes, I guess holding the individuals and the entities to account.

So I mentioned we've started litigation against those two super trustees.

We've taken started action against several advice firms.

We've started action against one of the lead generation firms and a research us that gave positive ratings to the shield Master Fund, as well as already taking a ministry of action to ban a number of advisors.

So all of that is part of the bigger picture in terms of trying to stop this sort of thing happening again, by with the bannings taking some people out of the industry who in our view of caused harm, and with the other action, trying to send a really powerful message to others that might be considering engaging in this sort of conduct that there are consequences and they can be really serious.

I don't want to be fatalistic, but it strikes me that no matter how hard you try as a regular leader, it's a conversion of this one born every minute, right, it never stops.

There is always people who will infiltrate the system and not act appropriately, and that way, the conventional systems can never stop that until it's revealed.

Do you think you have a reasonable that this is a landmark case that may change things or not.

I think this has the potential to change things by if we're successful in our litigation.

And on top of the litigation I've already mentioned, we've got the option if we think it's appropriate to refer some matters to the Director of Public Prosecutions to consider criminal action.

We're not there yet, but if that were to happen, that's an even stronger message to people about the consequences of engaging in this sort of conduct.

And then the other part of it is, we do think there is a question about whether there are some regulatory gaps, like whether the law could actually be tightened in a key few areas to better protect people.

And I think as we work through everything we've seen and complete these investigations our thinking we'll get clearer on that.

And the Assistant Treasurer has said the government is very much looking at that issue of whether there could be some law reforms to better protect people in the future from this sort of harm.

Okay, very good, and very good to get your view on that issue, which, of course, as I say, is unfolding still before our eyes.

Now, folks, there is some very interesting developments happening at ACID which I think would be very good for you to hear about.

We're going to catch up with that in a moment with Alan.

Talk to you soon.

Hello, Welcome back to The Australian's Money Puzzle podcast.

James Kirby here with Alan Kirkland ACCIK commissioner and the commissioner certainly, I think for many people with the most interesting part in ACCIC, which is in the consumer area, which is immense of course, and most of the stories that you read we'll come across his desk sooner or later because he's the police.

Now.

I mentioned at the start that we often mentioned money Smart, the website which is a very good resource, a free resource, a government resource, and to that extent, has exceptionally in the tendance and that is that's in your realm, and you've done a study of who's been using it, and you've discovered a few things, What did you find out.

We've done a really big piece of research here.

I mean there's been a range of quality of research talking to people in focus groups.

We also did a really large survey with around three thousand respondents, which is a pretty big sample for that sort of research.

I guess some of the high levels of findings that stood out to us were that only about a quarter of Australians over eighteen consider themselves to be very knowledgeable in relation to financial matters, and I guess on the flip side, around three quarters would actually like to be more knowledgeable.

So that says two key things to me.

One is there is a big gap that we can help to bridge in terms of helping be able to understand financial products and services and how to negotiate the system.

But also that people are really open to that, like that there is a thirst to know more, and so that just says there's a big opportunity for money smart.

We're already feeling that in many ways, but there's a big opportunity for us to do a lot more to help Australians who both need and want that sort of help.

I imagine part of this is due to the fact that and we have this is measured and it is audited, and it is beyond doubt that Australia was better and more more financially literate ten years ago and we have actually dropped through the OECD tables and we seem to be it's almost stagnant really.

In the UK this month they introduced financial literacy as a mandatory subject.

Do you think that to that extent those issues are reflected in what you're service showed?

Look, it's a bit hard to say, really, I think it.

I said.

Our reflection has been that Money Smart in some senses has been a bit of a victim of its own success in that it has been really effective I guess, attracting the attention of lots of Australia.

It has over eleven point seven million visitors per year.

That's a lot.

We probably haven't really been thinking on an ongoing basis about how do we just constantly improve and make sure we're addressing the right topics that people are thinking about, that we're talking about them in ways that resonate with the different groups of consumers that are thinking about those topics, and also going to consumers where they are, whether that's you know, on social media, talking to people like I'm doing with your listeners today.

So I think for us as a reflection, we actually need to be investing a lot more in keeping money Smart fresh and just constantly evolving.

That you mentioned you've found some particular revelations as such an on the pre retiree area, Can you tell us a little about that.

What did you find out?

What do our listeners need to know?

Yeah, that's a big focus for us, So I think your listeners will hopefully start to see a lot more, including some advertising in media to really try and lift the awareness of money Smart as a place you can go in if you're approaching retirement or in retirement.

So we're planning on doing a lot more in that area.

But I think one of the key things that we got from the research about pre retirees was some real clarity around the key questions that are on their mind.

So I yes, what are they all of Across all.

The groups that we research there, we are five key things that came up.

They were how much will I need to retire?

Will I have enough?

How do I make it last?

Am I on the right track?

And what can I do to improve now?

They're all really kind of sensible questions, but there are also questions that we can really provide practical help with both in terms of I guess information we can publish to help people to understand some of the key issues and products available, but also things like tools and calculators, which have always been at the heart of money smart as well.

So it's not just sort of, you know, publishing web pages where people can read stuff.

It's also always been about giving people tools that they can play with and help to understand how it applies to them.

I guess this question every week, everydear year.

How much should I have in super?

And I don't want to be facetious about it, but I see as much as you possibly can, there's a lot of estimates around.

I don't know how you guys dealt with this, but I could show you a spectrum of estimates of what people see that the average Australian or the everyday Australian investors should have in super to have a comfortable retirement or whatever.

And there's a big spectrum.

Why is there a big spectrum?

And are some people on that spectrum not being honest?

I think it's a really interesting question.

I mean, some of those estimates come from bodies in the superannuation industry.

There are others that come from I guess, groups outside the industry such as superannuation consumers Australia, and we draw on a range of them in our tools and really at Money Smart because we are independent, we don't have an agenda, so we're not trying to say we don't go into helping people saying this is what's right for you.

What we're trying to do is put the power into individual consumers and investors' hands, so to help them to understand the issue, give them tools, and the tool might sort of itself give a range of options, but it helps people to understand, you know, the implications of each option and to match it to their circumstances so they can work out what's the right answer for them and what they want to be aiming to have upon retirement, and then move on to think, well, how do I actually get there?

What decisions can I make now that will put me in a better position.

When I read retirement age.

The biggest single criticism I have of all those, and I only sort of figured it out in recent times, is that in general they do an actual areial assumption of some description and they say, okay, you're going to retire with sixty five and you've got X, and this is how you have this is how we're to work.

But they assume that at a certain point that these assumptions about how much you'll have each year at the calculators they tell you they assume it runs down to zero, and then you flip over to the pension when you are how will I describe this politely advanced old age on thirty grand a year or whatever it will be by then do you think that's is that the way you guys do it or is that the best way to do it?

I think it really depends on someone's individual circumstances, and we're trying to help people to understand that.

So the answer is very different depending on what sort of income you've been on as you approach to retirement, and what sort of lifestyle you're accustomed to and you expect to maintain.

Makes a big difference.

What your housing situation is, so do.

You own your own home or not?

It's probably one of the biggest factors.

And also, you know, are there any other sort of particularly important types of expenditure that you're going to have to face in retirement.

So we try to help people to work through some of those factors and work out what's right for them, and for some people indeed planning to spend some of retirement on the pension, maybe the right decision, But for lots of people that it's not going to be reality, to be honest, because in fact, the other thing we know is for people with significant superbalances on the whole, they tend not to use all of their super in retirement.

Many people die with still money left in their super.

So the idea that if you've got a decent balance, you're going to get down to the level where you'd be eligible for a significant pension isn't a reality for lots of people based on how they use their super now.

Based on what we know about how much they need behind.

Okay, just one last thing on that issue, we'd go to a break.

The estimates about how much you should have in super.

Are they, in your opinion, generally too high or too low?

Look, I think there's a range, I would say, question.

I think some of them are too high for some people's individual circumstances and the reality of what we know, because the other thing about we know about retirement is, in general, depending on the answer to that housing question, lots of people actually spend less in retirement there's a lot of expenditure that you incur when you're in of working age that just falls away once you retire.

And I think that some of the calculators don't adequately or some of the assumptions don't adequately factor that in, so.

Some of them do come up with relatively high figures.

And I guess that worries.

If that worries is if it makes people unnecessarily distressed around their current superbalance, which is why we're really trying to give people tools that they can trust to help them work out what's an appropriate figure for them.

Okay, very good, All right now, folks, we're going to tackle out on a random bunch of questions which I think you'll find very interesting.

In the last segment back in a moment, Hello, Welcome back to The Australian's Money Puzzled podcast.

James Kirby here with Alan Kirkland, the AC commissioner.

Now, Alan, no rhyme or reason to these questions.

They are random, but I think our listeners will find them find them very appropriate.

And folks, I didn't actually take questions from the audience.

These are my own questions.

Normally this part of the show and their listener questions.

But this is someone I've been looking and reading over over recent times.

Crypto.

I imagine crypto is something that you're alert to.

The great breakthrough for the sort of listeners that I have on the show.

We've always been a debate about crypto, but many listeners were greatly reassured by the arrival of exchange traded fans ETFs for crypto for the simple reason that you no longer had to explain to your auditor if you had an SMS if that you know, you were dealing with some exchange they never heard of.

They don't ask any questions.

Basically, it's an ETF file.

If you had crypto, they would be asking all sorts of questions.

From a regulatory point of view, the institutionalization wing of crypto, has it made it easier for you?

It's a really good question.

I mean, it gives us some clarity.

So if I talk about the non ATF world of crypto, when we're applying the law, we're applying the law.

That's been in place for decades.

It says what's a financial product and what isn't in Australia and what that means in reality is some crypto type products are financial products, some are not, and to some extent we're still working through that question as we take selective court action and we've got one that's before the High Court at the moment to really get the courts to help us to clarify how those long standing definitions apply to crypto.

So there's in some areas of crypto less clarity what the ETFs do.

I mean, the ETFs themselves are very clearly financial products that we regulate, so that just falls really clearly within the existing framework for managed investment schemes and we apply our usual approach to regulation to those.

The listener can know that they are squarely in your camp.

Then if they have chess and crypto, crypto from some exchange may not be is.

That it, Yeah, yeah, that's right, that's right.

Although they're actually just this week some reforms introduced to Parliament that will regulate digital asset platforms, so many of those exchanges will then if those laws go through, need to have a license with the ASSE, so they will be drawn into the regime.

But still the underlying crypto assets on those platforms may or may not be financial products, and that sort of way in which the current law applies will still be the case in relation to the assets, and maybe trade it on those platforms.

Can I ask you a private credit It's funny, you know, I've had a financial advisor on the show maybe three weeks ago who literally said there is no place for the private investor in private credit.

Extreme view, but you could see why they were saying that.

I had a financial advisor last week on the show very supportive of private credit, explaining why it's good for the retail investor, explaining why this notional democratization of private credit is a good thing.

He did, of course, say as long as its top tier, first class and you're guided by the best advisors.

I think have just one major effort on private credit.

We can't go into too deeply.

But what to the people who don't know anything about it and it's put in front of them, What would you need to tell them.

I would say, ask lots of questions.

I mean, we've just done a surveillance of over twenty private credit funds where some of them retail, some of them wholesome, where we went in and had a deep look at their practices and just a few examples of the issues that we found were some real gaps in transparency around what they are really, who they were lending to, and what the levels of risk were.

Lack of transparency around the fees that were being paid and where that's important was it kind of masked the level of risk.

So if they're telling you what the interest rate is, you can form a view or how that compares to other interest rates, what that means about risk.

But if they're then charging the borrower a whole bunch of extra fees they're not telling the investor about that actually signals the risk is probably higher than what you think.

So a range of.

Issues like that, and also different methodology you used across different different sorry terminology used across different funds, so the same time might mean quite different things in different funds.

So best piece of advice is to ask lots of questions and maybe approach with a degree of skepticism and if in doubt, maybe see several forms of advice before putting too much money into private credit.

I think it's got an important role to play in the economy, but there are some risks for investors at the moment due to the range of practices that we've seen.

It's funny it reminds me maybe two decades ago when in the early days of funds management in Australia active funds management.

Obviously, there was a boom period, as there always is when something is new, and the whole thing about fees was a big fuzzy area, and then slowly but surely this management expense ratio that was standardized emerged and then at last people could see not just what the fund was returning, but what they were paying in fees.

Is there something that you might aspire to somebody in that private credit area.

Yeah, absolutely, So we've called for the industry to lift it standards and it's been great to see a lot of people in the industry respond to that, and the Financial Services Council is leading a piece of work that will hopefully take on a lot of the issues that we've raised, but that's going to take a little while to play out.

So in the meantime, as I said, wise to ask lots of questions, because look, we saw some funds that probably raise less concerns for us, but some that raise some fairly serious concerns and it's a little bit hard for investors to navigate through that system and understand what they're dealing with until we see that lifting standards across the industry.

Okay, very good.

One last question, which we touched off at the start, about self managed super funds.

It seems to me they're in the news again in terms of the standards for want of a better word, in that entire area across the regulation of them, the advice to them, the auditing of them.

But when I look more closely at it, it seemed to me that the vast bulk of the issues that you had were in the area of commencement.

In these issues as they apply to people who are starting self managed super funds as opposed to the ongoing maintenance of a self managed super fund, which there's a million about one point two million or so people, Is that the hotspot as such for you as a regulator, the commencement part, or am I missing it?

And it's an issue that the issue is more broad.

Look, it's probably where we've got the biggest role.

So in general, smsfs are probably more regulated by the ATO than they are by ASSEX.

So we don't specifically regulate smsfs themselves, but what we do regulate is financial advice, and obviously one of the most significant moments in terms of providing financial advice or receiving it as an investor is around that decision to set up an SMSF.

Now, if there's advice that's provided along the way, we might also be interested in that.

But what we've recently done is have a look at advice to establish an SMSF because that is a high stakes decision.

Acknowledge this mss can be rightful lots of people, but they're not right for everybody.

So we really wanted to be to understand how.

All that advice is operating at the moment, and we flagged a few issues that we think the industry needs to focus on to make sure that people are getting appropriate advice.

And we do say that on the show all the time.

They're great as long as you understand what you're doing, as long as you're prepared to do the work and have your eyes wide open.

And they certainly aren't for everybody, and the less you are experienced in financial matters, the less suitable they are to you.

I would think, Alan Kirkland, marvelous to have you on the show.

Thank you very much for coming on.

It's been a real pleasure.

Thanks James, that was Alan Kirkland.

Folks the Act Commissioner and great to have him in the great spectrum of issues there.

If you've any questions, aren't any of those issues?

Let us know the money pots.

They're at the Australian dot com dot au.

Talk to you soon.

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