FAAA wants cap on escalating Dixon Advisory CSLR costs
The Financial Advice Association of Australia (FAAA) wants to contain advisers’ Compensation Scheme of Last Resort (CSLR) exposure to a maximum $20 million in circumstances where the cost of Dixon Advisory compensation looks set to escalate in 2025/26.
The concerns about the escalating cost of the Dixon Advisory compensation came amid news that formerly associated entity, E&P Financial Group (Evans and Partners) has sought to delist from the Australian Securities Exchange (ASX) citing cost savings and a share price the board considers to be below the company’s fundamental value.
(Evans & Partners) In a briefing provided to members, the FAAA’s Phil Anderson said that while the $20 million maximum compensation figure is unacceptable it was preferable to funding a sector compensation bill that could run as high as $56 million.
Anderson said the total cost of the Dixon Advisory ‘debacle’ to the CSLR scheme is potentially $339 million making it one of the biggest financial service scandals of all time.
“Dixon Advisory has set an example for what could happen in the future,” his presentation said. “Whilst there are other matters such as United Global Capital and Libertas, they will ultimately be much smaller.”
Anderson’s briefing noted that in terms of the total cost of Dixon Advisory compensation, $203 million was being paid by the 10 largest financial institutions, $1 million had been paid by the Government and the financial advice profession was facing into $136 million.
There exists a $20 million a year cap on what could be paid by a sector in any one year, but there was an expectation that compensation payments would run much higher in 2025/26 and it would be a matter for the minister to determine how this would be raised.
Anderson said that without legislative change, additional costs should be allocated to other sectors.
Advisers shouldn’t be paying for the CSLR in the first place – let’s bring the discussion back to where it should be.
Why should innocent, law abiding citizens pay penalties for those who have broken the law?
Would politicians be willing to do the same for the mistakes of their predecessors?
“E&P has sought to delist from the ASX citing cost savings and a share price the board considers to be below the company’s fundamental value”
….. yeh sure E&P, how about delist to avoid ASX reporting scrutiny.
What is the true value of E&P.
– Didn’t E&P owe Dixon’s $19 million that was somehow forgiven ?
– Didn’t E&P illegally Phoenix 39 Advisers and 3,000 client from Dixon’s ?
So if these costs are paid, what is the value of E&P ?
Current ASX capital value $116 Mill.
Less $19 mill owed to Dixon’s = 16% of the capital value.
What are the Advisers and clients worth ?
So the management and officers of E&P Financial Group are the ultimate former controllers of Dixon and, in my view equally as responsible as the direct management of Dixon, noting that in fact some officers of E&P may well have also be officers of Dixon. E&P is protected by “limited liability” as presumably they were just shareholders in Dixon. E&P “ride off into the sunset, with their bags of gold intact”, whilst the majority of the industry being the compliant, ethical and honest advisers are now being foced to pay for the unprofessional deceit and obsfucation of the ultimate controllers of Dixon, who will get away “scot free”. Whilst it is sad for the customers of Dixon, in promoting this solution the goverment has joined its peers, the management and officers of E&P, and is equally unethical and dishonest. Surely Dixon must have had “professional indemnity insurance” as this has been a requirement for years. The insurers have collected premiums and accumulated assets to underwite their risk, but I hear no news of any claims or payment by the insurers. As ASIC and APRA are Federal entities, everybody and anybody associated with the financial services industry should vote for the opposition at the next Federal Election, not because the opposition is necessarily better, but as a consequence for Albanise et al to think about when they consider “What did we do wrong?” The same tactic might also be the answer to the “$3 million supertax”. A progressive tax rate for superannuation is perhaps acceptable and perhaps reasonable, but the taxing of unrealised capital gains is a fundamental change in taxation law and probity. How long do you think it will be before “taxing unrealised gains” leaks out of the superannuation laws and into general law!! Politicians spend, spend, spend (in the late Kerry Packers words “What you lot waste the money on”) and run up huge deficits and debt for future generations to repay. This is the problem, there should be a constutional limit on deficits and goverments ought to keep the budget balanced. If these people were in business they would be bankrupt in notime at all.
Shouldn’t the Dixon clients who were the trustees of their SMSF, that though they were getting the secret sauce, take the financial responsibility too?
don’t be silly. We live in a world where personal responsibility doesn’t exist anymore. ASIC and AFCA think financial products should be treated exactly the same as a toaster bought at target. if it fails just go back to the FSP and ask for you money back!
Financial Advisers who deal in the live mkt shouldn’t have to pay into a scheme that compensates those people who’s MIS product failed. The MIS issuers should pony up to their product failures.