Curbing lead generation activity
This is a joint submission from Consumer Action Law Centre, Super Consumers Australia, Financial Rights Legal Centre, Mob Strong Debt Help, Financial Counselling Australia, Consumer Credit Legal Service WA and Consumer Policy Research Centre.
The scourge of lead generation is now in sharp focus, with 11,000 people experiencing the devastating loss of over $1 billion in superannuation savings through the collapses of the Shield and First Guardian Master Funds.
However, the systemic problems with lead generation have played out across multiple sectors over decades. These manipulative business models have circumvented hawking laws and caused significant harm to many people across Australia, particularly people who are already experiencing disadvantage or vulnerability.
The only effective solution to this entrenched problem is to ban lead generation in superannuation, by banning unlicensed commercial communication and advertising in relation to superannuation, and extending the hawking ban to all financial products and services. It is unviable to add new regulatory obligations, such as licensing and consumer disclosures, to a highly exploitative business model. It is also inadequate to leave the Australian Securities and Investment Commission (ASIC) to repair the damage after it is done. We also recommend a ban on lead generation for debt management and life insurance, given the similar significant harms.
An outright ban on lead generation in high-risk sectors and scenarios could be bolstered by the effective interventions proposed by Treasury, such as stronger responsibilities for businesses that deal with lead generators.
To genuinely curb the harms caused by lead generation – and prevent the next outbreak by shapeshifting lead generators – the proposed targeted reforms must be combined with broader protections. This includes extending the forthcoming ban on unfair trading practices to financial products and services, and significantly improve consumer data protections and rights.
Read our recommendations and full submission here (PDF).
Joint consumer submission – Curbing lead generation activity – final