ASIC confirms: Advisers left holding monetary baby of Dixon collapse
The collapse of Dixon Advisory has resulted in penalties and costs against the company of over $7 million but financial advisers are unlikely to see any benefit in terms of reducing the ASIC levy because the regulator does not expect the penalty will ever be paid.
However, ASIC has left open the possibility that it will pursue executives associated with Dixon Advisory.
While the Australian Securities and Investments Commission (ASIC) has in the past suggested the receipt of court penalties might reduce the cost of the levy in forward years, it has admitted to Senate Estimates that this is unlikely to be the case with respect to Dixon Advisory.
What is more, the regulator has admitted to Senate Estimates that it quite deliberately encouraged clients of Dixon Advisory to lodge complaints with the Australian Financial Complaints Authority (AFCA) – something which created a surge which may now ultimately have to be dealt with by a Compensation Scheme of Last Resort (CSLR) which will be mostly funded by advisers.
ASIC admitted that by issuing a media release in August around the Dixon Advisory situation, there were 1300 more complaints received by AFCA.
In relation to our enforcement actions they are finalised with the court ordering that civil penalty of $7.2 million be paid to the Commonwealth together with ASIC’s costs which were in the amount of $800,000.
“But, of course, given the state of the company we don’t anticipate either the penalty or the costs are likely to be paid,” Court said.
Asked who would cover the cost of compensation relating to the Dixon Advisory collapse – the company, the advice profession or the Government, Court went on to explain that, in any case, the $7.1 million penalty and the costs order would not play a role in the CSLR.
She said that it would likely end up being regarded as an unpaid debt to the Commonwealth and sit separately from any issues that the CSLR might deal with.
Asked whether ASIC would be pursuing those who had taken decisions related to the Dixon Advisory collapse, Court said that, despite the civil penalty proceedings being finalised, ASIC was “continuing to consider issues arising out of the Dixon collapse”.
Corrupt useless ASIC were warned for years of Dixon’s dodgy vertical products and sales and of course ASIC did nothing until it’s too late.
Now Real Advisers are left paying the bills yet again via ASIC Levy & CSLR.
COMPLETE & UTTERLY BROKEN SYSTEM AND REGULATOR SHOULD BE HELD TO ACCOUNT.
ASIC lawyers to worried about Bonus for cases to go for companies early… no bonus for them if they did the right thing and engaged with companies and clients early…. not too long ago ASIC Quote “We wish other advisers were more like Storm” Product failure not researched property again by ASIC, licenced by ASIC. AISC always say its not our problem, the people doing the right thing are forced to pay litigation get nothing back into the pool that paid for it, then turn around and say the costs are going up…. you can’t make this stuff up when is enough enough.
Not to mention ASIC employees are government employees already on $$$ plus 17% super etc yet also need Bonuses it looks and smells rotten when the enforcer make the rules grey, wait years to find and enforce issues then get paid massive bonuses and we are told don’t investigate half of all the reports given. have ponzi schemes going and yet want to put financial advisers in jail for a missed month fee on a FDS when the client has signed about 8 forms to agree to the fees being charged in the first place.
“Accountability” is once again absent. The principals and owners of Dixons at the time the offences were committed should be liable for the costs and fines, as they set the policies of the firm. If there’s no accountability how do we dissuade others from doing the same again?
This is great. Advisers should get praised!
the regulator has admitted to Senate Estimates that it quite deliberately encouraged clients of Dixon Advisory to lodge complaints with the Australian Financial Complaints Authority (AFCA) – something which created a surge which may now ultimately have to be dealt with by a Compensation Scheme of Last Resort (CSLR) which will be mostly funded by advisers.
What a lazy, corrupt and incompetent body ASIC is. Instead of chasing those responsible for the significant damage to clients they pick the easy option, stick the bill with all good honest, hard working and under appreciated advisers. The directors for Dixon go back to their mansions and set up another scheme to pay for their next Ferrari. Rinse and repeat. Advisers are then left to work out how they are going to fund another levy for another scheme set up to reward crooks like Dixons, banks and other product providers..
I miss those full page ads in the Fin Review…
Nice high returns… nice and safe? LOL
ASIC has made it very clear in the past that any money they generate from court action does not go against their operating costs. So this is nothing new; the fact remains that financial advisers are funding a Big Government Bureaucracy because Jane Hume and Josh Frydenberg want small businesses to pay.
With respect, ASIC’s behaviour seems fine here. Dixon Advisory was clearly a financial adviser practice, just a bad one with questionable practices. Therefore our money is up for it. Paying for the banks’ transgressions once they left advice is different.
In addition, ASIC should encourage victims of dodgy advice to ask for compensation.
The only issue is that they waited far too long as Dixon’s practices were well-known but that is incompetence and not corruption.
So ASIC didn’t do their job, ignoring an obvious issue that was going to lead to a significant number of clients being affected. So why do all good honest advisers, the majority of them in small businesses, have to fund the errors of Dixon’s and ASIC? Why should those doing the right thing have to fund those doing the wrong thing just because it is easier for ASIC than chasing the directors of Dixons? Where is the deterrent to the next Dixon knowing that walk away from the mess with no penalty? There is no way possible a reasonable person would say ASICs action was fine here.