Dixon Advisory is to be expelled by the Australian Financial Complaints Authority (AFCA), preventing any new complaints being made against the firm.
In a statement, AFCA said the administrators have 21 days to make any submissions regarding the notice of expulsion and, pending board consideration, the expulsion is set to take effect on 30 June 2024.
The board will consider any submissions made by Dixon at its next board meeting on 20 June 2024 but flagged that the requirement for Dixon to remain a member of AFCA under ASIC has now expired.
It also noted concerns it had received about Dixon’s membership from the Financial Advice Association Australia (FAAA) given the membership had been extended twice since it went into administration.
Almost 2,500 complaints have been received about Dixon, AFCA said, including more than 500 since 15 February 2024.
Once an AFCA member is expelled, AFCA cannot accept any new complaints against that former member.
The decision has been welcomed by the FAAA as complaints against Dixon are a major contributor to the high costs imposed on advisers in the Compensation Scheme of Last Resort (CSLR). It has also previously called on Minister for Financial Services, Stephen Jones, to clarify how long complaints against Dixon would be received.
The CLSR financial adviser levy is $18.1 million, out of a total of $24.1 million, and the ‘surge costs’ related to Dixon have been allocated to the financial advice sector in their entirety.
Chief executive, Sarah Abood, said: “The FAAA has been calling for Dixons’ membership of AFCA to be ended for some time. It has been extended twice, despite the fact the company went into administration in January 2022. This meant that complaints by former clients could continue to be made and would continue to be eligible for compensation from the CSLR, considerably increasing the potential cost of the scheme to financial advisers well beyond the actuarial estimates.
“Ending the membership of Dixon as proposed, effective on 30 June 2024, represents an appropriate and fair outcome for consumers, providing them with ample time to lodge a claim, as well as recognising that the profession is funding the compensation.”
While Abood was supportive of the CSLR, in principle, she said problems remain beyond Dixon Advisory in how it has been funded.
“The burden should not fall on financial advisers who have done nothing wrong. It is economically impossible for the small business financial advice sector to underwrite the failures of large listed firms. The CSLR has created a situation where companies can simply walk away from a failed subsidiary, leaving the rest of the sector to compensate clients. This is a dangerous precedent and removes the consequences of poor or risk-taking decision making.”
How about, like everywhere else in the world, we let PI insurers deal with events like this, rather than having financial planners who have no complaints against them, pick up the costs of AFCA via a levy? Sorry, doesn’t seem rocket science to me. Caveat emptor!
GREAT EXAMPLE OF A GOVT DEPT SHIRKING IT’S RESPONSIBILITIES. THEY WERE GETTING A BIT TOO MUCH WORK.NONE OF THE REST OF US CAN WALK AWAY FROM A DIFFICULT BUSINESS SITUATION SO EASILY IDEA!?NEXT TIME ASIC CALLS JUST SAY YOUR BAND NOT TALKING TO YOU ANYMORE. aS FAR AS HAVING TO COMPENSATE THEIR CLIENTS OR ANY OTHER PLANNERS CLIENT IS AN IMPOSIBLE DREAMWELL ABOVE THE RESOURCES OF THE AVERSGE PLANNER
ASIC SHOULD HAVE JUMPED ON DIXON YYEARS AGO. I REMEMBER A TV ADD BY DIXON YEARS AGO THAT IF THEY WERN’T SO HIGH PROFILE AT THE TIME WOULD HAVE GOT ANY OF THE REST OF US A LONG HOLIDAY JG