E&P Financial Group (E&P) has settled a class action related to Dixon Advisory for $16 million.
A statement from Shine Lawyers said it has agreed to a settlement payment of no less than $16 million, inclusive of legal costs in full, in the final settlement of the claims of the lead applicant and group members.
The settlement is without admission of liability and subject to approval by the Federal Court.
The action related to advice given to Dixon clients to invest in the US Masters Residential Fund, which Shine Lawyers alleges was inappropriate advice, failed to address conflicts of interest and were not in the clients’ best interests.
The Australian Financial Complaints Authority (AFCA) has estimated consumer losses stand at $357 million from the failure.
Although the class action has settled, group members retain their right to bring a separate claim against Dixon regarding the compensation scheme of last resort.
The announcement follows comments made by Senator Andrew Bragg on 15 November questioning why the company is unable to pay its regulatory fine. Dixon was penalised by ASIC for $7.2 million, and the regulator has since stated it does not expect this fine will be paid as Dixon is in voluntary administration.
He said: “There’s been no criminal prosecution, no civil process other than a small fine which won’t be paid, but the further fly in the ointment is that Dixon Advisory has phoenixed itself into Evans & Partners.”
According to its latest financial results for the FY2022–23, E&P has net revenue of $167.1 million and 7,400 clients with $23.4 billion in funds under advice.
“This doesn’t sound like the Evans & Partners business and Dixon Advisory business is short of cash but yet they can’t pay their regulatory fine,” he said.
As a result of the voluntary administration, Bragg said it is now down to the taxpayer to compensate the affected consumers and he questioned why this had applied to Dixon Advisory when it had not done so to other firms.
The firm had been identified in the government’s budget as likely to increase the liabilities of the Australian government under the CSLR.
Bragg said: “A profitable ongoing business cannot find any ability to pay its fine and who’s left with the bucket? The taxpayers. The taxpayer will now have to fork out and provide reparations for people who have lost their money and who have not been compensated.
“Why has Dixon been singled out? Of all the dreadful financial scandals going back to Storm Financial, none have been bailed out and there have been so many consumers wronged by an industry that has put itself ahead of its own clients and a weak pathetic regulator that has not enforced the law.
“The question is, why has Dixon been singled out? We need to know why, and I will be pursuing this.”
Click here to read a timeline of Dixon Advisory’s legal woes.
Thank you Laura, as a Storm Financial victim, I will welcome your follow up with this…ASIC have much to answer for.