Time for ministerial intervention on Dixon Advisory claims

The reality for financial advisers is that the slow pace of handling Dixon Advisory complaints means that the Federal Government will only end up covering the cost of one compensation case, according to the SMSF Association.

SMSF Association chief executive, Peter Burgess has joined industry calls for the Government to step in and agree to pay all outstanding Dixon Advisory compensation claims, rather than leaving the task to financial advisers.

Burgess said last week’s announcement by the ACFA that it would terminate Dixon Advisory’s membership drew a line under the number of complaints that could be handled by the Compensation Scheme of Last Resort (CSLR).

“While we welcome this announcement, the cost of Dixon’s compensation claims lodged before the end of the financial year but paid after, could still amount to many millions of dollars that ultimately will need to be paid for by the advice profession,” he said.

“We think there is a perfect opportunity now for the Government to step in and, like the ACFA, draw a line under the advice industry’s financial responsibility by agreeing to cover all unpaid Dixon compensation claims.”

Burgess said that when this scheme was first announced it was understood the Government would cover the first year of the scheme. However, this period was subsequently reduced to only three months and given the slow progress of the Dixon complaints, it meant only one Dixon compensation case has been funded by the Government.

“We are urging the Government to show their support for the financial advice profession and agree to this simple request.”

The Association has also thrown its weight behind a review of the scheme’s funding model, labelling it “unstainable and untenable”.

“We support the CSLR in principle but expecting small advice firms to pick up the tab for the failures of a large advice firm, which is a subsidiary of an ASX-listed company, is both inequitable and contrary to the Government’s stated policy of making accessibility and affordability of advice a priority.

“Further, the exclusion of managed investment schemes from the CSLR’s funding model risks pushing more costs on to the advice professions and driving more advisers out of the system at time when they are needed most.”