Curbing lead generation activity

Lead generation activities to be regulated 7 min read

Following the collapses of the Shield Master Fund and First Guardian Master Fund, Treasury has released a consultation paper on curbing lead generation activity.

The proposed reforms will be particularly relevant to businesses that use or conduct lead generation activities (including advice licensees and authorised representatives), as well as superannuation trustees and other Australian financial services licensees.

In this Insight, we outline Treasury’s proposed reforms and the key issues for lead generators and other affected parties.

Treasury consultations following fund collapses

In the wake of the recent fund collapses, Treasury has released three consultation papers, each of which closes on 22 May 2026:

• Enhancing member protections in the superannuation system
• Compensation Scheme of Last Resort – reform options to support ongoing sustainability
• Curbing lead generation activity.

This Insight focuses on the 'Curbing lead generation activity' consultation paper, which sets out four broad areas for reform:

• Enhance accountability for the conduct of lead generation activities
• Extend anti-hawking requirements
• Target remuneration structures that may incentivise poor conduct
• Target advertisements for earlier intervention.

Treasury has proposed a number of alternative options in relation to each proposed reform area. This consultation coincides with ASIC's review of advice licensees that use lead generation services, announced on 18 February 2026.

While the consultation paper will be directly relevant to businesses that use or conduct lead generation activities (in particular advice licensees and their authorised representatives), the reforms include proposed amendments to the design and distribution obligations regime and the conflicted remuneration and hawking prohibitions. The paper will therefore also be of interest to superannuation trustees and other Australian financial services (AFS) licensees and, in particular, others who provide information to consumers about superannuation for a commercial benefit.

For details on Treasury's related consultation, please refer to our Insight, 'Enhancing member protections in the superannuation system'.  

Key takeaways

• Licensing obligations for lead generation activities. Treasury is consulting on ways to increase accountability for lead generation activities, such as requiring lead generators to be authorised under an AFS licence. Alternatively, current AFS licensees could be responsible for overseeing the conduct of lead generators.
• Greater restrictions on cold-calling consumers. Treasury is proposing to reform the anti-hawking laws to restrict unsolicited consumer contact relating to lead generation activity by strengthening consent requirements or by limiting or removing the financial advice exemption.
• Possible disruption to remuneration structures. Treasury is targeting remuneration structures involving lead generators that may incentivise poor conduct. Lead generators would be banned from accepting conflicted remuneration, and the definition of conflicted remuneration would include certain benefits in relation to lead generation arrangements.
• Restrictions on superannuation advertisements. Treasury is considering options to improve accountability for superannuation advertisements. Advertisements relating to superannuation would need to disclose a responsible AFS licensee, and ASIC would have enhanced stop order powers to take down such advertisements.

Lead generation

In the consultation paper, Treasury describes 'lead generation' as referring to 'the process of identifying potential customers to whom products or services can be marketed or offered (ie ‘leads’), with the goal of persuading consumers to purchase the product or service.' These activities may be undertaken by businesses themselves or by third parties, such as online content creators, telemarketers or intermediaries including 'lead aggregators'.

Reform 1: Enhance accountability for the conduct of lead generation activities

Treasury says there is uncertainty about how and when lead generation activities become a 'financial service' requiring an AFS licence, resulting in lead generators' conduct falling outside the AFS licensing regime, and advisers and AFS licensees who benefit from the arrangements not being legally responsible for the lead generation conduct.

The consultation paper sets out four alternative options:

• Bring prescribed lead generation activities into the regulatory framework: certain lead generation activities would be prescribed as a type of financial service. This would require those who engage in such activities to hold or be authorised under an AFS licence. This will require a legislative definition of 'lead generation', which could be defined:
  • broadly to encompass the entire lead generation process (from the initial collection or assessment of consumer information);
  • more narrowly to focus on passing on consumer information or making a referral to financial advisers; or
  • even more narrowly to only capture activities relating to superannuation products (recognising that lead generation activities relating to 'superannuation switching' are 'high-risk').
• Banning unlicensed communication to consumers about superannuation: this option would prohibit any unlicensed person from providing information to consumers about superannuation for a commercial benefit. Treasury describes this option as a 'blunt test' targeting superannuation rather than lead generation, although it would still target lead generator conduct at the start of the lead generation process.
• Enhance accountability of licensees for the conduct of lead generators: AFS licensees would be required to take reasonable steps to ensure any leads or referrals they obtain are sourced in compliance with the relevant regulatory and legal requirements. This option would place accountability on the licensee (which Treasury says is the 'entity that ultimately benefits from the consumer interaction') for the conduct of the lead generator and would also utilise the proposed definition of 'lead generator' discussed in the first option above.
• Clarify and extend the application of design and distribution obligations to lead generation: the definition of 'retail product distribution conduct' would be expanded to include lead generation activities. As a result, product issuers and distributors would be required to take reasonable steps so that lead generation activities to promote or refer consumers to their products are consistent with the product's target market determination.

Reform 2: Extend anti-hawking requirements

Treasury proposes two options to 'strengthen the protections provided to consumers from uninvited real-time contact', which could be implemented together or separately:

• Enhance the conditions around consent: Treasury proposes a number of alternatives—a broad ban on real-time contact not initiated by the consumer; a time delay between interactions with the lead generator and the financial adviser; or requiring a person initiating real-time contact (eg a lead generator) to prominently disclose certain information at the start of the interaction, such as the purpose of the contact and any fees or benefits they might receive from the contact.
• Limit the exemption for financial advice: currently, the hawking prohibition does not apply to an offer, request or invitation made in the course of giving personal advice, which Treasury says allows unsolicited contact to be 'cleansed' through the financial advice process. Under this option, the personal advice exemption would be removed entirely or restricted to only apply to advisers who offer products to existing clients or who offer non-superannuation products. Treasury notes the proposed restrictions would target the type of business model used in the Shield and First Guardian cases and also particular risks associated with superannuation switching.

Reform 3: Target remuneration structures that may incentivise poor conduct

Treasury notes that some remuneration arrangements between a lead generator, product issuer and financial adviser can produce incentives that are not aligned with the interests of the consumer. Treasury gives as an example an adviser who may be incentivised to provide advice to clients referred to them by a lead generator with a vested financial interest in increasing investment in a particular financial product that ensures further referrals.

Two options are proposed.

• Capture lead generators under the conflicted remuneration ban: third-party lead generators and their representatives whose actions could reasonably influence advice ultimately given to a retail clients would be captured under the conflicted remuneration prohibitions in the Corporations Act. Treasury gives two examples of how this could be achieved—deeming third-party lead generators to be a representative of the product issuer or seller; or prohibiting the remuneration of lead generation activities which could reasonably influence the advice provided to a retail client.
• Clarify or expand the scope of 'benefits' captured under the conflicted remuneration ban: the definition of conflicted remuneration would be broadened. Treasury gives the following as examples of how this could be achieved—to include 'client flows' likely to influence advice provided or resulting from lead generation arrangements or to narrow the current exemption for client-provided benefits so that it applies only to fees for actual services provided by an advice provider.

Reform 4: Target advertisements for earlier intervention

Treasury notes that click-bait advertisements are commonly used to attract consumers to websites or online forms where they then provide contact information and consent to be contacted by third parties such as financial advisers and product issuers. These consumers may then be exposed to targeted and high-pressure sales tactics, increasing the likelihood of consumer harm.

Treasury proposes the following two options:

• Require superannuation advertisements to display AFS licence numbers: promotions relating to a superannuation fund would need to identify the responsible AFS licensee, which would effectively prohibit advertising in relation to superannuation without an AFS licence. Treasury notes this could complement the options in Reform 1 above.
• Expand ASIC's stop order power to take down financial advertisements: ASIC's existing stop order powers would be expanded to a 'broader range of financial advertisements'. Treasury says this could include extending the powers to advertisements by lead generators, expanding the types of omissions that may trigger a stop order (including absence of AFS licence details) and lowering the evidentiary threshold for triggering the power (eg where ASIC reasonably believes an advertisement has resulted, or is likely to result, in substantial consumer harm).

Next steps

Submissions close 22 May 2026. Treasury has asked 29 questions for consultation in relation to the reform proposals put forward in the paper. Please get us in touch with us if you have any questions or would like to discuss the proposals.