The Australian Financial Complaints Authority (AFCA) has doubled its team to handle Dixon Advisory complaints, with the Compensation Scheme of Last Resort (CSLR) just six weeks away from implementation.
In an update, it said it has received more than 1,900 complaints as of 1 February 2024 from consumers about the business and will “accelerate work” on these complaints.
This is the largest batch of complaints received against a single member that AFCA has experienced since being set up five years ago, it said.
“Before Dixon, AFCA had generally issued about 200 determinations a year in its investment and advice jurisdiction. AFCA has doubled the size of its investment and advice decision-making team and increased its case management workforce, among other steps in response to the flow of Dixon complaints.”
It has also published a “lead decision” which considers core issues and principles that can be applied to a batch of similar cases.
Further complaints are still possible as Dixon Advisory is required to maintain AFCA membership until at least 8 April 2024.
Last year, AFCA chief executive David Locke told the Senate Economics References Committee that if all Dixon complaints were paid out, it would total $357 million.
ASIC cancelled the Australian financial services licence held by Dixon Advisory on 5 April 2023 after it fell into voluntary administration. Former clients were urged to consider lodging complaints with AFCA to preserve possible eligibility under the CSLR.
The CSLR is set to commence in April, and AFCA said it is aiming to work through the decisions to determine who is eligible for the scheme when it commences.
The CSLR will facilitate the payment of up to $150,000 in compensation to eligible consumers who have received an AFCA determination awarding compensation in relation to complaints in one of four areas: personal financial advice, credit intermediation, securities dealing or credit provision.
ASIC deputy chair Sarah Court told the Senate estimates hearing last year that the $7.2 million penalty issued to Dixon Advisory for breaches of the Corporations Act is unlikely to ever be paid.
The company was fined $7.2 million in September 2022, with the Federal Court finding that six representatives of Dixon Advisory failed to act in the clients’ best interests and failed to provide advice appropriate to their clients’ circumstances.
The court found that on 53 occasions between October 2015 and May 2019, Dixon Advisory was the responsible licensee of six representatives who did not act in the best interests of eight clients when they advised these clients to acquire, rollover or retain interests in the US Masters Residential Property Fund (URF) and URF-related products.
