Australia's Netwealth to pay customers $66.72 million in ASIC settlement (updated)

Netwealth

17/12/2025 21:55

Netwealth to record compensation as extraordinary expense

Shares rebound after dropping to an eight-month low

Netwealth halts certain high-risk investments pending review

Adds share moves in paragraph 2 and details in paragraphs 3, 10

Dec 18 (Reuters) - Australia's Netwealth NWL.AX said on Thursday it has agreed to compensate affected customers of its superannuation master fund with an estimated A$101 million ($66.72 million) following an agreement with the country's corporate regulator.

Shares of the financial services firm reversed course to climb 0.8% to A$26.71 by 2344 GMT. Earlier in the session, the stock dropped as much as 4.8% to a nearly eight-month low.

The Australian Securities and Investments Commission (ASIC) sued two company units for failing to properly assess investment risks in the First Guardian Master Fund, where they acted as trustees for the Netwealth Superannuation Master Fund.

The Australia-listed company said it will record the compensation as an extraordinary expense in its first half accounts in fiscal 2026. It expects an impact of about A$71 million to its net profit after tax.

"This is the fourth action we have taken against a superannuation trustee in relation to our ongoing First Guardian and Shield investigations, and follows ASIC securing the payment of A$321 million to Shield investors by Macquarie," ASIC Deputy Chair Sarah Court said.

Separately, the Australian Prudential Regulation Authority (APRA) said on Thursday it had accepted a court-enforceable undertaking from Netwealth Superannuation Services to address material weaknesses in its investment governance framework and practices.

According to the agreement, Netwealth will be required to engage an independent expert to review its investment governance framework and high-risk investment options on its platform menu, among others.

It will also have to stop adding certain high-risk investments until an independent expert confirms they have undergone enhanced checks and are in members' best financial interests.

Costs associated with First Guardian and related activities in FY26 are not expected to be material, Netwealth said. It expects to base its FY26 dividend on underlying earnings, excluding the one-off compensation payment.

Over the last few months, Netwealth said it has undertaken various activities to improve its investment governance framework, including the creation of a new executive-level role.

($1 = 1.5138 Australian dollars)

 (Reporting by Sneha Kumar in Bengaluru; Editing by Shinjini Ganguli and Sherry Jacob-Phillips)

 ((Sneha.Kumar@thomsonreuters.com))