FAAA ramps up demand for Dixon Advisory public inquiry

The Financial Advice Association of Australia has ramped up its push for a public inquiry into the collapse of Dixon Advisory, the role of the Australian Securities and Investments Commission (ASIC) and its impact on the cost of funding the Compensation Scheme of Last Resort (CSLR).

The FAAA is insisting that a public inquiry is necessary because there exists an obligation on the part of the Government to reveal “how did things go so badly wrong”.

The FAAA’s policy director, Phil Anderson has produced a paper and posted it to social media which points to a litany of failures and stating that the Dixon collapse was about “much more than a few advisers providing poor advice”.

“This is about an entire business that was focussed on heavily selling in-house investment products, and one in particularly (URF), that turned out to be deeply flawed,” Anderson said.

The FAAA paper states:

“The Dixon Advisory debacle is so much more than just an advice issue, and only pursuing the advice related issues seems like a miscarriage of justice”.

“The bottom line is that ASIC never took action against any individuals -not the advisers (who have unfairly taken the bulk of the blame), nor the executives, who were ultimately responsible for running the business.

“That Dixon Advisory was also ordered to pay ASIC’s legal costs of $800,000 is an important element of the announcement for the financial advice profession. This money should have gone back into the pot, in terms of offsetting the cost of the case which was charged to the financial advice profession under the ASIC Funding Levy.”

“What really happened at Dixon Advisory and why so many Australians lost so much money (hundreds of millions) has so far remained a tightly held secret. ASIC has pursued its action, seemingly agreeing to place virtually the entire focus on a group of financial advisers, although they later agreed they would not pursue them further. A resulting class action from Shine (and more about that below) also provided little insight.

“The clients of Dixon Advisory deserve better. This has undoubtedly come at a big cost to them, both financially and through the stress that it has caused. The financial advice profession, who will seemingly need to pay as much as $135 million as a result of this scandal, also deserves to know what really happened and to have confidence that everything was done to minimise the cost to them, as well as ensuring that it could not happen again.

“This cannot be left where it is,” the FAAA paper says.

“A public inquiry is essential to get to the bottom of this. There have been public inquiries in cases where the losses have been much less. The Government needs to launch a full inquiry into Dixons, including the operation of the Compensation Scheme of Last Resort (CSLR), to discover exactly what happened, and how the design of the CSLR can be improved to ensure that this never happens again.”