Super switching scams and high-pressure sales: warning signs and how to check an offer

A common pattern in super harm works like this: an online ad, social media post or cold call offers a "free super health check" or comparison; a caller then pressures you to roll your super into a different fund, investment option or a new self-managed super fund, often promising high or "guaranteed" returns; and the money ends up in high-fee or high-risk products, sometimes with advice fees deducted along the way. ASIC has repeatedly warned about this, and in recent years some members who switched through these channels lost a large part of their retirement savings when the products they were moved into failed. The safest response is to stop, do not give your details, and check independently before moving any super.

This guide is part of the super mistakes overview. It describes general patterns, not any particular business. General information only, not legal or financial advice.

How these schemes usually run

Some of the businesses involved are unlicensed; others are licensed but act against your interests. Either way, the pattern is the warning.

Warning signs

• You were contacted out of the blue about your super.
• The offer is "free" but you are asked for your fund, balance or myGov login.
• You are told your fund is about to fail, freeze or be closed unless you act now.
• There are promises of high, fixed or guaranteed returns.
• You are urged to set up an SMSF to buy property or a single investment.
• You are discouraged from talking to your family, your fund or another adviser.
• The person will not put things in writing, or the documents do not match what was said.
• An adviser's fee is to be paid from your super, often as a percentage of your balance.

The law on unsolicited offers

Australia has a prohibition on hawking financial products: since October 2021, generally no one may offer you a financial product, including super, during an unsolicited contact such as a cold call. A call that starts as a "survey" or "health check" and moves to recommending a switch is a red flag. Financial advisers must also be registered and act in your best interests when giving personal advice. Report breaches to ASIC.

Checks before you move any super

1. Check the person and business on ASIC's professional registers through Moneysmart: the financial advisers register and the licence register. If they are not there, stop.
2. Check ASIC's investor alert list on Moneysmart for the business or product name.
3. Call your own fund on the number from its official website (not one the caller gives you) and ask whether there is any real issue with your account.
4. Compare fees and returns yourself using the ATO's YourSuper tool and the fund comparison checklist.
5. Ask for the Statement of Advice in writing and read the fees section: upfront fee, ongoing fee, product fees.
6. Check insurance: switching usually ends existing cover; see insurance inside super.
7. Sleep on it. A genuine recommendation will still be there in a week.

SMSF pitches

Self-managed super funds can suit some people, but they come with legal duties as trustee, annual audit and running costs, and a minimum practical balance at which they are cost-effective. Warning signs in an SMSF pitch include: a focus on buying one property, usually from the promoter's own network; borrowing inside the fund; and little explanation of trustee duties. The ATO regulates SMSFs and has information for people thinking of setting one up.

Illustrative cost comparison: an SMSF with $150,000 that pays $3,000 a year in accounting, audit and administration costs is paying 2% a year before investment costs — more than double the total fees of many large-fund options in this example. At $600,000 the same $3,000 is 0.5%.

If you think you have been caught

1. Contact your fund immediately. If a rollover has not been processed, it may be possible to stop it.
2. Contact your bank if you paid any money directly.
3. Change your myGov password if you shared it, and contact the ATO.
4. Report to ASIC and Scamwatch, and to ReportCyber if it involved online identity theft.
5. Get help with identity misuse from IDCARE, a free national identity and cyber support service.
6. Complain to the adviser's licensee and then to AFCA; see complaints to your fund and AFCA.
7. Ask about compensation: AFCA can consider complaints about licensed advisers, and in some cases the Compensation Scheme of Last Resort may be relevant where an AFCA determination is unpaid.

Early access schemes are a related pattern; see early release of super.

Frequently asked questions

Is it a scam if a comparison website calls me?

Not necessarily, but any unsolicited call that moves to recommending a specific product or switch is a warning sign under the hawking rules. Hang up and check independently.

My fund called me. Is that safe?

Funds do contact members, but they will not ask for your full password. If unsure, hang up and call the fund back on the number on its website.

Can I reverse a switch?

Once money has moved and been invested, you generally cannot undo it automatically. Act quickly; the earlier you contact your fund, the more options there may be.

What is a reasonable advice fee?

There is no set figure, but you must agree to fees, they must be disclosed in writing, and ongoing fees must be renewed. Ask for fees in dollars, not only percentages.

Official sources

• ASIC — warnings on high-pressure super sales, hawking prohibition, report misconduct
• Moneysmart — financial advisers register, investor alert list, super scams
• Scamwatch — report scams
• ATO — SMSF regulation and protecting your myGov account
• AFCA — complaints about advisers and funds