Lead generators supplied more than a third of new clients at 15 financial advice licensees reviewed by the Australian Securities and Investments Commission (ASIC), which has now warned that relying on such arrangements could jeopardise licences.
According to ASIC Commissioner Alan Kirkland (pictured), lead generators referred 7,639 new clients to those licensees between January 2025 and June 2026, or 35% of their new clients. More than $678m was switched or invested as a result, around 90% of it from superannuation, while advice businesses took $9.8m in upfront fees and secured commitments to $4.5m in ongoing fees.
Kirkland was blunt about what the review found.
“The poor approach to oversight taken by some licensees is unacceptable, particularly considering the scale and volume of business generated from these arrangements,” he said in a media release.
The findings, published in Report 845, centred on a small group of Australian financial services licensees with known links to lead generation. In some cases, lead generators had been allowed to discuss advice recommendations with consumers, assess their risk profiles and gather their personal information.
The regulator also found evidence of potentially misleading messaging, including fear-driven claims and performance comparisons that did not compare like with like, used to prompt consumers to review their super or move their investments.
“Consumers should not feel pressured or be misled when making important financial decisions,” Kirkland said.
Licensee safeguards were frequently found wanting. ASIC pointed to insufficient caps on how many clients each adviser could take on, limited tracking of product recommendation patterns, a heavy dependence on manual supervision and restricted access to lead generators’ call recordings.
“Commercial incentives must not come at the expense of consumers,” Kirkland said.
ASIC said it supported the federal government’s reform proposals, announced on 19 August, aimed at curbing harmful lead generation, but stressed it would continue to take enforcement action under current laws where it finds evidence of serious consumer harm.
The regulator has already pursued a number of related cases. These include Federal Court proceedings against lead generation business Clark Family, which ASIC alleges misled consumers by promoting financial product comparisons while selling their enquiries to the highest-bidding broker. ASIC has also commenced action against Imperial Capital Group Australia in connection with the Shield Master Fund.
The latest review builds on ASIC’s earlier publication of entities involved in lead generation, which began with 44 names in February and grew by a further 19 in June.
Get the hottest and freshest property and mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
