ASIC confirms: Advisers left holding monetary baby of Dixon collapse

Mike Taylor

Managing Editor and Publisher

11 November 2022

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”.