The same old technicality catches advisers again
The same regulatory interpretations which saw financial advisers levied to pay for the Australian Securities and Investments Commission’s (ASIC’s) legal action against Westpac/BT over superannuation issues will see the Compensation Scheme of Last Resort (CSLR) recompense Dixon Advisory clients.
Treasury officials have made it clear that while the Dixon losses were owed in part to investment in a managed investment scheme, they will be relying on the advice provided around investment in that scheme to ensure use of the CSLR.
The Treasury answer has come against the background of financial advisers having lobbied hard, but fruitlessly, for the funding of the CSLR to be broadened to encompass managed investment schemes and other products.
Treasury assistant secretary, Robb Preston said the use of the CSLR in respect of the Dixon collapse and the managed investment scheme related to the advice rather than managed investment schemes, in general.
“It was the conflicted advice which was the key trigger which brought those claims into the compensation scheme of last resort as advice is one of the four elements that the compensation scheme can cover” Preston said.
Questioned by NSW Liberal Senator, Andrew Bragg, about how much the CSLR was likely to deliver in the case of the Dixon collapse, Preston said it was too early to say but there were figures in the range of $250 million to $300 million being canvassed.
“There are 2,040 complaints which are eligible to claim,” he said noting that a significant proportion of those related to the collapse of Dixon advisory.
Earlier in the committee hearing, Senator Bragg noted that the only around $7 million had been extracted via action initiated by the Australian Securities and Investments Commission (ASIC) yet the losses amounted to around $300 million.
Why should honest advisers, who were powerless to prevent bad advice by Dixons, be forced to pay compensation for Dixons bad advice?
The bad advice by Dixons could have been prevented by ASIC specifically targeting obvious bad behaviour, instead of undertaking broad scale persecution of all advisers including the honest majority. It could have been prevented by Hayne outlawing vertical integration instead of giving it the green light. It could have been prevented by legislators overturning the licensing model that renders advisers powerless, and puts control in the hands of product companies.
These are the people and organisations who should be funding compensation for Dixons clients and other victims of bad advice. Not honest, powerless, advisers.
Dixon was running full page ages in the Australian Financial Review. Would a “reasonable person” expect at least one staff member in ASIC to have access to the major financial newspaper in Australia? Advisers are simply being unreasonable expecting that ASIC should have done something earlier than they did as they were too busy targeting advisers who got their fees wrong by 1c on an FDS. Another reason to quit.
So the QAR review totally endorses, even promotes the virtues of vertical integration.
Here we have greedy promoters of a financial product using the advisory license to flog dodgy product where the advisers are EMPLOYED directly or indirectly by the product floggers. Were the advisers culpable in not fully understanding their product, perhaps yes, should they have stood up to their employer, difficult to do but definitely yes but only if they perceived the product to be genuinely flawed. If it looked like a good thing and was adequately researched it’s 100% on the MIS. Should they be held accountable for the failure of the product itself, definitely not. Blame needs to be apportioned appropriately.
When a court hands down a judgement in similar cases they apportion blame. When a bureaucrat does it’s arbitrary and administratively easy and completely lacking in common sense and any level of equity or fairness with no rights of appeal.
Now ALL advisers will pay for the malfeasance of the few. Where the hell is the PI in all of this???
When will this cabal of idiots in Treasury and ASIC be removed so the 99% of honest people can get on with their lives without this level of injustice being foisted on honest people.
We just need a professional standards board with teeth that exercises strict discipline where required. We also need some of the principle of caveat emptor to be present in these cases. Retail investors yes, completely blameless, no I’m afraid they are not.
So $300,000,000 divided by 18500 licensed advisers is a $16,216 addition to the ASIC levy over the next two or three years?
I think there’s only around 15,600 advisers left…so $19,230 and since we are losing 2 advisers for every adviser gained this number is only going to get bigger…
Quite likely many more after this rot
It seems many are asking that. Advisers are getting out at twice the rate new ones are coming. But worrying stat this year is, 12 provisional advisers have got out. So they did the study paid the money, had a closer look and said no thanks!
Maybe they found the exam too difficult? It seems like quite a few provisionals are failing it. After all, they only had to do a mickey mouse FASEA degree to become provisionals.
Meanwhile those advisers who completed high quality (non FASEA) degrees, and passed the exam with ease, are being disparaged by the mickey mouse club as “uneducated”.
Maybe Hayne should cover the costs for allowing vertical integration to continue after the RC despite all the issues. He could split it with ASIC for not doing there job.
Why would anyone become a financial adviser!
I ask myself that at least once a week and I haven’t come up with an answer.
Just for clarity, under the design of the CSLR, it is the largest 10 financial institutions, not financial advisers, who will pay for the Dixon Advisory complaints. Financial advisers will not pay for this scheme until 1 July 2024.
Yep and I bet ya Dixon’s wont be sorted out until after that date and guarantee Advisers will get stung for the Dixon vertically owned MIS rubbish.
That’s just for clarity and reality.
What then after 24? Inane. This should not be funded by advisers nor should kangaroo court Afca or hypocrite ASIC. We should be self regulated and product providers and fake sales vertically integrated advice should pay
Another truly sickening aspect of this is ASIC’s treatment of fines paid to them. Rather than being set aside in a trust to help in situations like this, (i.e. pure public interests to help affected members of the public/clients), they instead pay out tens of millions to ‘community groups’, which in reality are yet more left-leaning Labor voice pieces like CHOICE et al
sickening!
Looks like the next season of Utopia has started earlier than expected!!!!
As the Federal court judgement said ‘The contraventions were not the result of isolated or unauthorised conduct of the representatives. Six representatives committed the contraventions over a period spanning some three and a half years.’
Yet again, we as advisers are left holding the bag for the MASSIVE shortcoming of ASIC to actually do their job in a timely manner.
Maybe we as advisers should launch a class action against ASIC and Treasury for breaching their standards…. sorry got carried away, they clearly have no standards.
Inane theft. Our profession represents less than 5% of claims but the product providers who fail get off Scott free. Dixon was a failed vertical product solution, no advice is utter theft and crap. Then to “investigate” why advice is expense? And use the scale against the Profession to spruik more product advice. Complete rott lies and theft