Treasury Q&A reveals ‘complete disregard’ for CSLR impact
The Government needs to commit to fixing the Compensation Scheme of Last Resort (CSLR) before the upcoming Federal Election, according to the Financial Advice Association of Australia (FAAA).
The FAAA has renewed its calls for Government action on the CSLR with general manger, Phil Anderson issuing yet another position paper which, amongst other things, points to documents obtained under Freedom of Information (FOI) indicating Treasury officials knew how much the regime would cost the advice profession but disregarded the consequences.
The FOI documentation covers are Question and Answer pack attaching to the CSLR legislation and the FAAA’s latest position paper says that the pack “demonstrated a complete disregard for the implications on the financial advice profession”.
It cited the following Q&A:
Q: “Won’t the scheme make financial advice more unaffordable without fixing the real issues?”
A: “Any costs that financial advice licensees face from the CSLR is a direct reflection of misconduct and insolvencies occurring within the sector. The advice sector can reduce those costs by doing [what] it can to eliminate misconduct and insolvencies”.
“The advice profession is furious about this type of comment in the full knowledge that the Dixon Advisory problems had been repeatedly reported to ASIC over many years, and that they took so long to act,” the FAAA position paper said.
“In response to a June 2024 Senate Estimates Question on Notice from Senator Andrew Bragg (Ref BET098), ASIC acknowledged that they had received 60 reports of misconduct in relation to Dixon Advisory between October 2008 and September 2022, and no doubt many were from advisers.
“ASIC’s own submission to the Senate Economics Committee’s Wealth Management Companies Inquiry admits that they initially undertook a significant surveillance exercise with respect to Dixon Advisory in 2015, yet evidently took no action,” the FAAA said.
The position paper said that the FOI information makes it clear the Government was well aware of the scale of the Dixon Advisory scandal back in August 2022 but no mention of the collapse was contained in the Explanatory Memorandum accompanying the CSLR bills.
Given ASIC had been receiving complaints since 2008- how many Dixon clients (who were subsequently impacted by Dixon failures) could also be in a position to initiate legal action against ASIC for their regulatory negligence over many years.
I would contend that ASIC bear far more responsibility for Dixon client losses than the broader advice community.
I cannot understand why the broader advice community is paying for Dixon’s client losses. Why should we pay for their years of malpractice – their PI should be paying. Their losses have nothing to do with the broader advice community.
Because we have been stitched up, with no real clout (lobbying power to push back) and regardless of the noise coming out from Jones etc, ultimately, they don’t see us as solution to the advice situation rather they see ISA and their qualified advisors to be the solution. And they will continue to treat us with distain, because who cares? The media? The Australian public?
This answer from Treasury officials reflects one of the greatest myths and misunderstandings that has led to so much bad regulation over the last 10 years. It is a myth and misunderstanding that industry participants have control and influence over the minority of wrongdoers within the industry. And it is a completely incorrect conclusion that punishing the industry as a whole is the best way to “clean it up”.
The facts are that most industry participants are innocent and powerless. The inappropriate licensing structure that was designed for vertically integrated product companies, and government refusal to allow any element of adviser self regulation, ensures this. The only option available to innocent and powerless industry participants is to report bad behaviour to the regulators. But this is pointless when regulators fail to take timely, targeted action against the real causes of harm, and instead choose to persecute the innocent, powerless majority.
ASIC totally fail to do anything against Dixon’s for 10 plus years and dump their failure on Advisers.
ASIC let Dixon’s Illegally Phoenix a $19million debt, 3000 clients and 39 Advisers to E&P for zero consideration.
Treasury have staff impacted by Dixon’s MIS fiasco thus make Dixon’s the only retrospective claims for CSLR.
The same Treasury then employ Nerida Cole, head of Dixon Advice and Investment committee member which forced Advisers to flog dodgy Dixon’s in house MIS.
Then ALP Jones knowing to CSLR massive Dixon’s claims cuts short by 9 mths the Govt exposure and pays for 1 single Dixon’s claim out over 4,000.
CANBERRA POLLIES AND BUREAUCRATS HAVE NO SHAME AND ACTUALLY ENJOY PERSECUTING ADVISERS TO COVER THEIR USELESS INACTION AND CORRUPTION.
Get stuffed Canberra.
Advisers must refuse to pay CSLR for Dixon’s.
Treasury have treated financial advisers with the same contempt for 25 years. The only difference is the FPA/FAAA’s response.
A: “Any costs that financial advice licensees face from the CSLR is a direct reflection of misconduct and insolvencies occurring within the sector. The advice sector can reduce those costs by doing [what] it can to eliminate misconduct and insolvencies”.
Contempt by treasury has no bounds.
Under the logic of the CSLR, suburban GPs could be held responsible for the horrific conduct of cosmetic surgeons (as revealed in recent years by the media), and then the Department of Health could say it was the GP’s fault because they didn’t stop the misconduct that was taking place in the cosmetic surgery sector. Why is this CSLR regime only being applied in the financial services industry?
Add the building companies that accepted people’s life savings as deposits for homes they were never going to build
This is yet another absolutely disgusting and appalling story out of Canberra.
We are are clearly at war.
Fight back.
This 1 financial planner did:
ASIC should review the case and properly investigate the financial planner they crucified (lost their houses, savings and nearly lost his family and suffered significant distress through this experience until now) for alleged churning of insurance products. Through some bogus complaint (severely manipulated & incomplete information) regarding this financial planner, they alleged the financial planner churned insurance products and put his clients into an inferior product and claimed commissions from it (His superiors received the commissions as per evidence, not him, he was an employee). Turns out, this financial planner had no choice to represent himself at the AAT (no funds to hire a lawyer or barrister, spent $400k), Evidence shows new life insurance products clearly had more features and benefits and monthly premiums was significantly lower and had a reference number before assessment for every single file. Materials was severely manipulated to make it look like this financial planner was a crook. This financial planner had no compliance breaches, 100 plus good character references from the community and industry & had all the awards, 3 independent experts was hired to investigate the matter and turns out there was no formal / verbal warning of any breaches and other financial planners were doing it and still practising. The transfer form provided was the incorrect form. The correct transfer form was generated after this financial planner left.
When the truth started to surface, executives and including ASIC delegate who ruined this financial planner’s life, retired/resigned and employed somewhere else. ASIC has ruined this person’s life including his family (I am sure ASIC staff have families themselves) by not investigating this matter thoroughly & properly, they simply relied on materials provided to them. Lastly, they alleged 49 client files was churned, however, when this financial planner, decided to represent himself and directly asked for the 49 client files so he can thoroughly investigate his matter, he has only received 20 client files, until now remaining 29 files have not been presented. Information on the judgement states, “retraining & monitoring this financial planner was a better option considering the truth was revealed”. ASIC need to take accountability for their significant errors and correct this.
With no legal background, this planner represented himself against ASIC for 2days to show them the truth, he was by himself and had the courage to do it.
The complete disregard for the profession occurred when the FAAA/FPA came out in support of a CSLR .
This great bog new tax should have been opposed rather than welcomed.
Gee what a surprise – financial advisers are being unfairly perscucuted by the very government and public servants we elect and pay for to look out for our interests. However, the desperately sad thing is that this disgraceful attitude pervades the entirety of the public service in Commonwealth, State and local council all over Australia. Like him or loathe him, this is why Trump was elected. Again. It’s high time we had a Trump come through and remind these people the meaning of the term public servant…
Well said David