SMSF scam alert: how I was offered returns of 18-24pc

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SMSF scam alert: how I was offered returns of 18-24pc

Opinion piece written by John Maroney, CEO, SMSF Association

First published in Australian Financial Review on 03 November 2021. Licensed by Copyright Agency. 

An approach to SMSF Association chief John Maroney serves as a warning not only to DIY fund trustees but to all investors.

The call came one late afternoon. At the other end of the line, boasting a refined English accent, was “Nigel Greenday”, who introduced himself as a senior superannuation planner with ASAL Group, which he described as a specialist in assisting people manage their self-managed super funds.

He had his pitch down perfect; it certainly wasn’t a hard sell. But the claim that ASAL was a fully owned subsidiary of a named major financial institution that had been in the market for 35 years made my ears prick up. I have been in the financial services industry for all that time in various roles with different organisations, yet had never heard of it.

Greenday’s follow-up email, while well written, confirmed my suspicions that this was a potential scam. It read, in part, “our clients, on average, are seeing returns on their investments of between 18 per cent and 24 per cent per year, depending on weighting based on their retirement goals, within a secure and structured environment”. Returns of between 18 per cent and 24 per cent a year! Too good to be true.

In addition, there was this “nice” touch at the end of the email. “Finally, we do normally charge a one-off fee of $1200 to open your trading account which does include a full ASIC/ATO compliant audit as well as your investment strategy. However, during the month of June, we are waiving this fee for all new clients who come through our marketing campaign.” In other words, get in now to save yourself $1200.

My first step was to ask a colleague who had spent several years at the named major financial institution to ask his former employer to see whether it had ever heard of ASAL Group. Not only was the answer “no”, but it came with the accompanying comment: “This is really scary as they are using the AFSL [Australian financial services licence] of one of our subsidiaries”.

A follow-up call from Nigel came soon after, This time he was a little more insistent, asking me to provide personal information over the phone and by email, including the ABN [Australian business number] and TFN [tax file number] for my SMSF and a copy of my driver’s licence, so he could set up a trading account for me.

Having passed on all the information I had to the Australian Securities and Investments Commission (ASIC), I furnished the details of this phone call to the regulator. I never heard from Nigel again, and strongly suspect I never will.

Higher returns, lower fees?

If you google ASAL Group, the first website to appear is Cybertrace, a company offering intelligence-based investigation products to commercial and private clients. Among other things, it says in a blog that it is “issuing an urgent scam alert for a fake superannuation investment company called Australia Securities Administration Pty Ltd [that is] promising significantly increased returns and reduced management fees.”

My personal experience reflects a growing sophistication by scammers; the days of Nigerian letters offering untold millions are long gone. Now the pitch is silky smooth, the tone of the voice on the phone reassuring and the paperwork convincing – in this instance, right down to having the AFSL of a subsidiary of a major institution. Not surprisingly, SMSFs are a likely target, although it should be stressed all investors are vulnerable to these unscrupulous operators.

When I spoke to Brendan Facey, ASIC’s senior executive leader for misconduct and breach reporting, he said two alerts on potential investment bond and SMSF scams had already been issued this year, and that DIY funds should be alert to the regulator’s warnings as it might help avoid a scam.

As the ASIC website explains, there are steps to take on receiving a cold call or an unsolicited email:

  • Always verify who you are dealing with before handing over ID, personal details or money.
  • Investing in financial products always involves some level of risk, but it is important to check that investment opportunities are legitimate before investing.
  • If a company contacts you to offer investment opportunities, be cautious. It could be a scam.
  • Be wary about providing your personal identification documents to people you don’t know. Red flags include the website disappearing, speaking to different people who have the same voice and changing email addresses and contact details.
  • Some scammers copy legitimate websites and use names lifted from the internet.

For me, it was the reported returns that set the alarms bells ringing. And this, I would suggest, is a good litmus test for all investors. For any scam to be enticing, typically it must offer returns investors are not getting. Nigel was offering 18 per cent -24 per cent, with the inference being that this was the year-on-year average return. If only!

The scammers will keep on coming; access to SMSFs and other investors is easy. All investors must be on their guard, and, where feasible, report anything suspicious to ASIC.

To learn more about how to spot a scam, please visit SMSF Connect’s Scam Awareness page.