Having sought shareholder approval in November, E&P Financial Group has formally delisted from the ASX after six years.
The firm, which is the parent company of Dixon Advisory, stated earlier this year that it sought to delist from the index, having first listed in May 2018.
An extraordinary general meeting (EGM) was held on 1 November and the proposal received 76 per cent approval by shareholders. This was only a narrow win as the proposal required an approval rate of 75 per cent to pass.
It was later announced on 27 December that the firm had completed its delisting.
The delisting was not welcomed by all shareholders, however, with Lee Iafrate, whose Australian Wealth Advisors Group (AWAG) held an 8.9 per cent stake, saying the deal failed to reward loyal shareholders.
“The H2 results showed the firm was turning a corner. It would have been more honourable to let the shareholders benefit from that, given the horrendous losses they endured. Only a handful of shareholders will have done well from the delisting.
“E&P was emotional and had a history of failure, it was one of Australia’s worst financial scandals, it was a nightmare and pretty horrendous how it happened. But buying the shares was a profitable exercise in the end, we got a 23 per cent return.
“It was not the bonanza we hoped for as we had internal valuations of 60–65 cents per share, which would have been a 40 per cent return, but 23 per cent is still a respectable achievement.”
Dixon Advisory is currently the subject of an inquiry by the Senate economics references committee into the collapse of wealth management companies, how can they be avoided, and the role of ASIC in preventing them.
Since it collapsed in 2022, there have been over 2,700 complaints received from consumers by the Australian Financial Complaints Authority (AFCA). Given Dixon is in voluntary administration, the majority of these complaints have to be funded by the Compensation Scheme of Last Resort (CSLR) which came into force in April 2024.
This has led the CSLR levy for financial advisers to reach $18.5 million and it is expected to exceed the sector cap of $20 million in the next levy period.
As a result, commentators such as the FAAA’s Phil Anderson have called for the Dixon Advisory complaints to be funded by a wider range of companies. This is partly because the FAAA believes the problems with Dixon Advisory lie with its vertical integration model which pushed the US Masters Residential Property Fund (URF) to retail consumers.
He said: “The losses that we are paying for are not just advice-related, they are much broader than this.
“The business model was that decisions were made about how much each client would invest by an investment management committee, not by the individual adviser; this was an organised process of forcing clients to effectively invest in an in-house product.
“This is much bigger than an advice issue.”
However, in its own submission to the inquiry, AFCA was adamant that the fault in cases lay with the adviser.
“To be clear, even though these matters all related to a failed product, the failings were in the advice process.
“For complaints AFCA receives about advice to invest in a failed product, AFCA will consider whether the advice met the standards prescribed in the law, that is, whether that advice was in the best interests of the client. AFCA will then consider, as a separate issue, whether the failure caused loss to the client and whether it is fair in all the circumstances having regard to the law, the actions of the product provider and adviser to attribute all or part of the loss to the advice firm.”
