The Australian Securities and Investments Commission (ASIC) has become the latest regulator to issue a warning against cold-calling operators using high-pressure sales tactics and online click-bait advertisements to lure consumers. The regulator also identified some operators that provide “inappropriate superannuation switching advice.”

The Use of Cold Calling by Financial Advisers

These cold-calling operators have lead generation and referral arrangements with a small subset of financial advisers, who usually advise consumers to switch their superannuation savings to other high-risk investment schemes.

According to the warning issued today (Tuesday), the cold-calling operators obtain consumers’ personal information from third-party data brokers or by using online clickbait. The regulator further pointed out that the cold-calling operators typically target Australians aged between 25 and 50 years.

“Some of these cold-calling operators are pressuring consumers in critical retirement-saving years to move their savings when it is not in their best interests, putting them at risk of having less super as a result of inappropriate investments, fees, and charges,” the Commissioner of ASIC, Alan Kirkland, explained.

“The small subset of financial advisers benefiting from this conduct threatens to undermine the reputation of the rest of the industry.”

Actions Against Cold Calling Operators

The warning came as part of ASIC's continued crackdown on the cold-calling business model. The regulator initiated its actions against such businesses in 2020 by revoking the license of one such firm and banning the associated advisers and managers. However, the regulator was cracking down on unlicensed firms using cold calls for years.

Meanwhile, ASIC is not the only regulator that has taken action against pushy cold-calling sales tactics. Last year, the UK Treasury recommended a country-wide ban on the use of cold calling by financial services companies.

While ASIC only pointed out that the cold-calling operators are advising high-risk investments, the real menace of such tactics is grave. Otherwise known as boiler room operators, pushy sales tactics using cold calls are also very popular among scammers. Global regulators have cracked down on many such operations over the years and are still issuing warnings against such operators.