Fresh blow for Australians after $1.2billion wiped out in First Guardian, Shield super fund collapse
Australians who poured their retirement savings into the failed First Guardian and Shield superannuation funds have received more bad news.
The government compensation scheme set up to repay victims of financial misconduct is mired in a $170 million funding black hole.
Meanwhile, liquidators have revealed one of First Guardian’s biggest investments will likely return only a fraction of what it was worth.
The twin setbacks have raised concerns thousands of investors may never recover much of the estimated $1.2 billion wiped out when the First Guardian and Shield funds collapsed last year.
Liquidators this week asked the Federal Court to approve a deal allowing them to settle a $37million loan owed to the fund by property company Western Subdivisions for just $2.9million.
The loan was one of First Guardian’s largest investments.
Liquidators Paul Harlond and Ross Blakely said accepting the $2.9million settlement represented the best commercial outcome after concluding that Western Subdivisions had virtually no assets left to repay the full $37 million debt, The Australian newspaper reports.
The proposed settlement is the latest sign investors are unlikely to recover significant amounts through the liquidation process.
In May, the liquidators revealed they had recovered just $3.7million from the fund’s investments despite being appointed more than a year earlier.
Australians who poured their retirement savings into the failed First Guardian and Shield investment funds have received more bad news
With little prospect of recovering significant sums through the liquidation process, many investors had instead pinned their hopes on the government’s Compensation Scheme of Last Resort.
Introduced after the banking royal commission, the scheme was designed to compensate consumers when financial firms collapse or refuse to comply with determinations made by the Australian Financial Complaints Authority.
But new figures show the safety net is now under enormous strain.
The CSLR requires $190.3 million to fund financial advice claims but has collected only about $20 million through ASIC levies.
Much of the blowout has been driven by the sheer scale of claims stemming from the First Guardian and Shield collapses.
CSLR CEO David Berr said the government needs to raise $190.3million to fund all financial advice claims.
‘Since November 2025, details have emerged relating to the potential size and scale of compensation required from the CSLR in relation to Shield and First Guardian Master Fund failures,’ Mr Berr said.
‘Consequently, the revised estimate now incorporates an allowance for claims relating to these products.’
David Anderson, 46, a director of the First Guardian fund, is accused by ASIC of siphoning millions of dollars into his personal ANZ bank account and shifting money overseas after the corporate regulator launched an investigation into his business affairs
Faced with a $170.3million funding shortfall, the government is considering forcing more of the financial sector to foot the bill.
Assistant Treasurer Daniel Mulino has launched consultation on expanding the CSLR levy to include financial advisers and APRA-regulated super funds.
Thousands of First Guardian investors are still waiting to receive compensation despite winning their cases with AFCA after financial services licensee InterPrac Financial Planning, which authorised advisers to recommend the fund, launched a legal challenge against the rulings.
InterPrac named former client Melinda Kee as a defendant after AFCA ruled she should be compensated for losses she suffered after being advised to invest in First Guardian.
Ms Kee, who heads SOS Save Our Super, was awarded $368,093.11 plus interest, payable within 30 days of accepting the determination on April 10.
Instead of paying Ms Kee by the May 10 deadline, InterPrac named her as a defendant in its legal challenge against AFCA three days earlier.
Ms Kee slammed the move, warning investors could be forced to wait years before the case is resolved.
‘Where there has been clear regulatory and systemic failure, victims should be compensated promptly,’ she told the ABC.
Instead of receiving her AFCA-ordered compensation, First Guardian investor Melinda Kee was named as a defendant in InterPrac’s legal challenge
‘Australians who have lost their retirement savings should not bear the financial and emotional burden of delays caused by failures within the very system they were required to trust.’
Separately, the Australian Securities and Investments Commission (ASIC) is conducting multiple investigations into the fund and its directors.
ASIC alleges First Guardian director David Anderson, 46, siphoned millions of dollars from the fund into his personal ANZ bank account.
The regulator also alleges Anderson transferred $274million offshore after learning he was under investigation.
Before the fund collapsed, he purchased a $9million mansion in Melbourne’s Hawthorn.
Fellow director Simon Selimaj, 63, had a $548,000 Lamborghini Urus registered in his name, which ASIC alleges was bought using money from the fund.
None of the money allegedly transferred offshore has been recovered.
