Netwealth First Guardian Class Action|Losses Beyond a $101 Million Refund?

The refund and the gap

Netwealth has been served with a class action over the collapsed First Guardian fund, and it says it will fight the claim. The wealth platform had already repaid about $101 million to affected super members. The investors now suing say that money did not cover all of their losses. When Netwealth confirmed the claim, its shares closed down 8.1 per cent. That was the steepest fall in the ASX 200 that session.

Rival platforms Hub24 and Praemium were sold off alongside it. Netwealth says its refund reflected each member's net capital invested. The lawyer behind the case says the claim seeks additional funds, including interest. The whole dispute sits in the space between those two statements. Netwealth told the market the claim relates to matters "previously addressed" through its court enforceable undertaking with ASIC.

It added that the compensation program was completed in January 2026. ASIC did not seek a financial penalty, pointing to Netwealth's timely compensation. On that reading, the matter looks closed. But the refund had a precise definition. Netwealth said it reflected "the value of each member's net capital invested in First Guardian." Members were returned to their initial balances. What that leaves out is time.

The fund's operator, Falcon Capital, froze withdrawals in May 2024. The compensation program finished in January 2026. That is roughly 20 months in which members could not reach their money. Laura Keily, principal of the law firm Keily McCrosson, says the class action alleges the compensation did not cover all losses. She says it seeks to recover additional funds, including interest.

The case is brought on behalf of Natasha Langby, who invested in a First Guardian option through Netwealth's super master fund. Keily McCrosson is a boutique firm based in Melbourne. It moved fast. On 21 September, Netwealth said it had received a letter with draft court documents. In an announcement on 25 September, it confirmed its subsidiaries had been formally served.

The options were open to adviser-led members from March 2021 until December 2022. In that window, 1,303 Netwealth members invested about $128.5 million. When withdrawals froze, around 1,080 members still had money inside. Together, that was about $100.7 million. That works out to roughly $93,000 per member. The question is what that money should be worth now, not what it was.

What is already decided

Netwealth's position is that these matters were dealt with. But dealing with them included a court judgment. On 20 August, Justice McEvoy of the Federal Court ruled in ASIC's case. The court found Netwealth had "failed to do all things necessary" under its financial services licence. Those services were meant to be provided "efficiently, honestly and fairly".

Its investment arm did not obtain sufficient information about the fund, the court found. Nor did it make sufficient independent enquiries to understand the risk. Even so, members could direct up to 100 per cent of their account into these options. The trustee also failed to tell members the options might become illiquid. That is exactly what happened when withdrawals were frozen.

According to Financial Standard, Netwealth and Macquarie both acknowledged last year that their due diligence failed. Both decided to compensate members in full for their losses. So the open question is not whether Netwealth failed. It is what in full means. When Netwealth first disclosed the threat, the claim's details had not been released, and its basis was unknown. The amount already paid is big for this company.

Netwealth's net profit after tax in the 2026 financial year was $135.4 million. The First Guardian refund equalled about three quarters of that.

The fight over lost growth

Netwealth is not alone. On 17 September, Gordon Legal filed a class action against Macquarie Investment Management over the Shield Master Fund. It acts for about 2,800 account holders. Macquarie had already paid out $321 million, covering what members had invested. Gordon Legal alleges investors were not compensated for "the growth their superannuation may have achieved".

That means growth "if those funds had remained invested elsewhere during that time". The industry calls this a but-for loss: what members would have accumulated, but for the switch into the failed fund. According to ifa, both the Macquarie and Netwealth claims seek to recoup these losses. Gordon Legal partner James Naughton put the plaintiffs' case plainly.

"For most Australians, superannuation is their most important asset," Naughton said. "It's time for Macquarie to pay the full amount back." Melinda Kee lost money in the collapses herself and advocates for victims through Save Our Super. Gordon Legal approached her about a class action. Kee said she "wasn't interested".

Her test, Kee told ifa, is this: "What gets investors as close to whole as possible, without taking another slice of their money or adding years to the process?" Kee agrees that, with capital returned, what remains is largely the but-for loss. So the two sides are not arguing about whether the loss exists. They disagree on the route to recover it, and who takes a cut.

Kee argues that complaints through AFCA, the financial complaints authority, and the last-resort compensation scheme, the CSLR, are free. She says money won there goes solely to investors, unlike a class action. She also warns a class action could draw the process out for years and cost members legal fees. Kee puts the average loss at around $120,000.

For many Netwealth investors it is less, she says, after their capital came back. In her view, many remaining claims could fall within the CSLR's $150,000 cap. That is one advocate's estimate, not an official figure. But it means the same losses could be pursued through two very different doors. One of those doors has a closing date.

Financial Services Minister Daniel Mulino has announced that only actual losses will be compensated through the CSLR from 1 July 2027. From that date, ifa reports, investors will also lose the option of AFCA complaints for but-for losses. The free route for exactly the kind of loss these lawsuits target is scheduled to shut. A class action does not rely on those schemes. So investors face a choice with a deadline.

They can use the free route while it lasts, or join a lawsuit that Kee says could take years and cost fees.

Who watches the gate

Regulators are drawing their own lesson. On 23 September, Treasury launched a consultation on better data for managed investment schemes. It said Shield and First Guardian revealed "gaps in the regulators' visibility of the sector". The paper said ASIC relies largely on annual financial reporting, which is "retrospective in nature".

It proposes quarterly data collection from registered schemes, to spot emerging risks earlier. Treasury put the retirement savings in First Guardian and Shield at around $1 billion. The court found Netwealth had too little information about the fund. Treasury now says the regulator lacked timely information as well. Netwealth, meanwhile, is reported to be using its power over who works on its platform.

According to internal documents seen by the Australian Financial Review, it froze the services of Clime Private Wealth after a review. Emails from late July to late August show Clime advisers were barred from onboarding new clients and opening new accounts. Netwealth also refused to register new advisers under Clime. The available reporting does not say what the review found, or link it to First Guardian.

Netwealth has told the market the class action does not relate to its current platform features or operations. Go back to the refund and the new bill. The $101 million put members back where they started. The lawsuit is about where they would have been, plus interest. Netwealth says it will defend that claim. The thing to watch is the claim itself: exactly which losses it pleads.

When Netwealth first disclosed it, that was not public. If it rests on growth and interest on money already returned, the fight is over the size of a gap. Members stand to gain that gap, and shareholders face a cost on top of the refund. If it reaches beyond that, the matters Netwealth calls previously addressed come back into contention. Then the refund may not mark the limit of Netwealth's bill.

Informational only, not investment advice. Figures and quotes come from the linked reports.