FAAA accuses ASIC of being off-target on Dixon Advisory

Mike Taylor

Managing Editor and Publisher

12 December 2024

The Financial Advice Association of Australia (FAAA) has hit out at the Australian Securities and Investments Commission (ASIC) telling a Parliamentary Committee the regulator focused too much on financial advisers at Dixon Advisory while ignoring the product manufacturing side of the business.

“It is evident from all the publicly released information, that ASIC focussed their regulatory attention almost entirely on the financial advice activity at Dixon Advisory and seemingly ignored what happened in the product manufacturing side of the business or the role of the parent company,” the FAAA said.

It used its submission to the Senate Economics References Committee inquiry into Wealth Management Companies and the CSLR to claim that this fact had been demonstrated by ASIC’s earlier responses to questions on notice including that product manufacturing side of the business was not core to ASIC’s investigation.

“ASIC chose to focus almost exclusively on the advice side of the business, reducing the prospect of finding evidence that might have enabled action against further directors and management,” the FAAA said.

“We believe that this approach failed consumers. It also highlights a flaw in the relevant legislation as it demonstrates that it is much easier to achieve success in action taken against a financial adviser on the basis of inappropriate advice, than it is to take action against directors and managers of a financial advice operation that designs and operates a business model that is fundamentally wrong and detrimental to consumers.

“It also highlights that it is very difficult for ASIC to take action against an entity, including the Responsible Entity and the investment manager, for failings in the management of a fund,” the submission said.

It said it was quite obvious that senior management, who were on the Dixon Advisory Investment Committee, were integrally involved in prioritising the interests of Dixon Advisory and related entities above the interests of clients”.

“However, Dixon Advisory did not concede this action in their negotiations with ASIC (2021) and as a result it was dropped in the ultimate settlement (2022),” the FAAA submission said.

“This further highlights questions about ASIC’s decision making in this case, including not investigating product manufacturing issues, not pursuing actions against directors and senior management and removing the original conflict priority action that was at the core of this business model – conflicts of interest.

“At least the class action commenced with a view to pursue the management of the business, however this ultimately was dropped as part of the negotiations over the settlement of the class action. It seems remarkable to us that, it is only the conduct of the individual financial advisers who were thoroughly investigated and deemed at fault – and yet to our knowledge no individual adviser of the group has been prosecuted.”