Dixon Advisory is an example of ASIC’s lack of enforcement action and wrongdoing will continue unless there are “heads on spikes”, according to Senator Andrew Bragg.
Speaking at the Financial Services Council (FSC) last week, Bragg discussed the enforcement action taken by ASIC and whether it is successful in stopping wrongdoing. He has been chairing an ASIC inquiry since October 2022 and a final report on this is expected in June.
Dixon went into voluntary administration and was fined $7.2 million by ASIC for breaches of the Corporations Act as well as the $1 million towards ASIC’s costs of investigation and legal proceedings.
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.
However, the regulator told Senate estimates last year that this is unlikely to be repaid and was issued to send a “deterrent” message.
“Given that Dixon is in voluntary administration, these amounts are unlikely to be paid,” ASIC deputy chair Sarah Court said at the time.
Commenting, Bragg said: “This is a very interesting case, effectively $300–400 million in consumer losses and then ASIC seeks a civil penalty of $7 million which recently, at a Senate estimates hearing, they tell me they will never collect that $7 million.
“Many of the people associated with the company and the general approach of the company is an ongoing entity under a different name.
“So I am very concerned that there are these cases where the criminal law and the civil law could be used and it has not been and the question is why?
“I believe there is a cultural problem, but there is also clearly a structural problem.”
There have since been almost 2,000 complaints from consumers made regarding Dixon to the Australian Financial Complaints Authority (AFCA).
Alongside the case of Nuix, which was sued for alleged continuous disclosure breaches and misleading or deceptive conduct, the two cases were examples of problematic behaviour, he said.
“We make a lot of laws in Canberra, but not a lot of them are enforced, and therefore that degrades the community support in the sector overall because feel that they are being ripped off or treated poorly, and we’ve seen a cavalcade of inquiries into [financial services].
“We don’t want to see people in your industry go to jail, that’s a reasonable aspiration to have, but the reality is that unless there are heads on spikes where there has been wrongdoing, then the wrongdoing will continue. That is the pattern we have seen at ASIC.”
