Jack got a cold call on his way home from work. Within minutes, he’d lost $23,000

Working Australians are the targets of cold-callers who pressure them into switching superannuation products, risking their retirement savings being drained of potential returns and significant fees.

Jack Smith* was on his way home from work one day when he was contacted by a cold-caller who offered him a free superannuation review.

Smith, who had $410,000 in super and $80,000 in life and disability insurance, was instead subjected to high-pressure sales tactics.

The cold-caller made misleading claims about his existing fund’s fees and performance and cast fear and doubt over its ability to sustain his retirement, suggesting he manage his own fund and invest in a property scheme.

Details of Smith, in his late 40s, were provided to a financial adviser who prepared an advice document stating he set up a self-managed super fund to invest in two funds operated by the adviser’s own licensee without assessing if these investments were appropriate for Smith.

He was advised to rollover $400,000 into the new self-managed fund after being misled to believe he should expect 15 per cent returns per annum.

Smith was asked to sign an authority to proceed electronically while he was on the phone and not afforded the opportunity to read and understand the advice.

In the end, Smith was invested in a “conflicted, high-risk product” which slugged him $23,000 in a series of upfront fees, including a cut to the cold-caller, and ongoing fees from the self-managed fund which increased by more than $11,000 a year.

The financial services watchdog is warning consumers to be wary after a review identified cold-calling operators using high-pressure sales tactics to bait people into receiving and acting on dodgy advice to switch their super.

The cold-callers had referral arrangements with a small subset of financial advisers who typically recommend consumers switch to super products at high advice fees, some engaging in misleading and deceptive conduct.

Operators often targeted workers aged between 25 and 50 with super balances of at least $50,000 — details purchased from third-party data brokers who scrape information from publicly available information.

The Australian Securities and Investments Commission has already observed large volumes of super funds flowing into high-risk property managed investment schemes in regulated super funds or self-managed ones.

Commissioner Alan Kirkland called on financial advisers and super trustees to do more to weed out “unscrupulous actors”.

“These cold-calling operators are pressuring consumers in critical retirement-saving years to move their funds into potentially inappropriate products and putting them at risk of having their super balances eroded by high fees,” Kirkland said.

As part of a new consumer awareness campaign, people are encouraged to “just hang up” on cold-callers and “just scroll past” clickbait advertisements on social media.

* Some details have been changed to preserve the anonymity of individuals.