Yes, an investigation of ASIC and Dixon Advisory is warranted

Mike Taylor

Managing Editor and Publisher

15 July 2024

EDITORIAL

There was a time when those working within the Australian Securities and Investments Commission (ASIC) were public servants substantially covered by the Public Service Act and therefore constrained by the mores of the Australian Public Service and its Code of Conduct.

Were that still the case, then those within ASIC who seemingly unilaterally decided to essentially front-end load the Compensation Scheme of Last Resort (CSLR) before it had even been legislated would have some significant questions to answer.

ASIC moved outside the Australian Public Service on 1 July, 2019.

What ASIC has freely acknowledged is that a decision was taken to advise clients of Dixon Advisory to file complaints with the Australian Financial Complaints Authority (AFCA) so that, in the vent that the CSLR was established, those clients could access compensation.

That could best be described as unwarranted bureaucratic activism and the consequence has been because of the expedient (some might say incompetent) Government handling of the CSLR funding model means that financial advisers are exposed to an estimated $135 million in compensation claims.

It is worth, therefore, considering that within Australian Public Service Code of Conduct sits the provision that public servants will: “not improperly use inside information or the employee’s duties, status, power or authority:

• 1. to gain, or seek to gain, a benefit or an advantage for the employee or any other person; or
  2. to cause, or to seek to cause, detriment to the employee’s Agency, the Commonwealth or any other person.

ASIC may wish to try to diminish the sins of its staffers by suggesting that they were simply seeking to act in the best interests of clients affected by the Dixon Advisory melt-down but that will simply not wash in circumstances where financial advisers, not taxpayers, are being asked to substantially fund the exercise.

It is in these circumstances, and against the background of the recent Senate Economics Committee adverse assessment of ASIC that an investigation into its conduct with respect to Dixon Advisory is warranted.

Notwithstanding its critics, ASIC does do important and valuable work, but a number of appointments and its engagement with consumer activist groups have raised questions about its independence and adherence to the old public service maxim of acting without fear or favour.

For the CSLR to be fully accepted by the financial advisers and others who are funding it, the air needs to be cleared around Dixon Advisory, the actions of ASIC and the oversight of Treasury.