The same old technicality catches advisers again

Mike Taylor

Managing Editor and Publisher

2 June 2023

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.