Strong Protection Against Superannuation Scams Needed
Superannuation fraud has become a critical issue, as illustrated by the experience of Lee Braz, who lost his life savings to sophisticated scammers.
This alarming trend underscores the urgent need for enhanced security measures to protect consumers as reported by Michael Atkin, National Consumer Affairs Reporter, ABC News.
Lee Braz, in his 50s, was diligent about managing his superannuation. When he received a call from a supposedly legitimate company offering to help, he took all necessary precautions—verifying the company’s registration and thoroughly reviewing their documents. Despite these efforts, scammers managed to steal his entire super balance of $180,000 by using fraudulent documents and forging his signature.
The scam exploited significant gaps in the security protocols of his super fund, Intrust Super, which is now owned by Hostplus. The fund failed to notice discrepancies in the rollover documents, such as a forged signature and a dubious bank statement. Crucially, the fund did not have multi-factor authentication in place, a security measure that could have prevented the fraud with a simple alert to Lee.
"Building strong relationships with our clients, combined with implementing essential security measures like two-factor authentication, is crucial in safeguarding their hard-earned savings. At the heart of our approach is the commitment to prioritise our clients' security and trust, ensuring their financial future remains protected."
Lee’s ordeal did not end with the theft. He embarked on a four-year legal battle to recover his funds, only to face further disappointment. The Australian Financial Complaints Authority (AFCA) initially sided with the super fund, claiming it had met its basic obligations. Although a Federal Court later ruled in Lee’s favor, highlighting serious errors in AFCA’s decision, the second review still left Lee bearing a significant portion of the loss.
The AFCA’s concept of “apparent consent” allowed the super fund to assume Lee had consented to the rollover, despite clear evidence to the contrary. This decision has been widely criticized for undermining consumer protection and failing to hold financial institutions accountable.
Lee’s case is not isolated. Many Australians have fallen victim to similar scams, losing their life savings to fraudulent schemes facilitated by inadequate security measures and regulatory oversight. Industry experts and consumer advocates are calling for urgent reforms. They suggest that the federal government implement stricter security obligations, such as compulsory multi-factor authentication and thorough verification of bank account ownership during rollovers.
Lee Braz’s tragic experience highlights a critical vulnerability in Australia’s superannuation system. It is a call to action for stronger protections to ensure that hardworking Australians can trust that their life savings are secure. As Lee poignantly stated, “They can’t be that complacent with people’s life savings.”
Philip Hall, Head of Financial Planning , Senior Adviser.
Freedom = Travel and Beach Time.
Phil is an experienced planner who enjoys working with clients to meet their financial goals now and into the future. Having previously been a teacher, Phil educates and guides clients; enabling them to make informed decisions to build, protect and manage wealth through a broad range of financial strategies.
Phil grew up in Hobart, but has worked and travelled widely overseas and interstate prior to returning and settling in Tasmania. He commenced working in the Financial Services industry in 2002 and has completed an Advanced Diploma in Financial Planning, several specialist courses in ASX listed products, SMSF, margin lending and is a Certified Financial Planner®. Phil enjoys travel, getting outdoors and spending time at the beach with his family.
Masters of Financial Planning, Bachelor of Education (Honours), CFP®, LinkedIn
