Australia's Netwealth to pay $66.7 million in compensation after ASIC settlement

Australia's Netwealth has agreed to compensate customers of its superannuation master fund with an estimated A$101 million ($66.72 million) following a settlement with the Australian Securities and Investments Commission (ASIC). The agreement stems from a lawsuit alleging that Netwealth failed to properly assess investment risks in the First Guardian Master Fund, where it acted as a trustee. Shares of Netwealth initially dropped but rebounded to climb 0.8% by 2344 GMT.

The company will record the compensation as an extraordinary expense in its first half accounts in fiscal 2026, expecting an impact of about A$71 million to its net profit after tax. ASIC Deputy Chair Sarah Court noted this is the fourth action taken against a superannuation trustee related to ongoing investigations, following a A$321 million payment secured from Macquarie for Shield investors.

Separately, the Australian Prudential Regulation Authority (APRA) has secured a court-enforceable undertaking from Netwealth Superannuation Services to address weaknesses in its investment governance. Netwealth will engage an independent expert to review its framework and halt the addition of certain high-risk investments until enhanced checks are completed, ensuring they are in members' best financial interests. The company anticipates minimal material costs associated with these activities in FY26 and plans to base its FY26 dividend on underlying earnings, excluding the one-off compensation payment.

(Source：Reuters)