The Financial Advice Association of Australia (FAAA) has called on Minister for Financial Services Stephen Jones to address the escalating costs of the Compensation Scheme of Last Resort (CSLR).
Its urging comes as the Australian Financial Complaints Authority (AFCA) announces it has received 544 complaints about Dixon Advisory since 15 February 2024.
This brings the total number of Dixon complaints to 2,492 since 1 November 2018 and it was announced in April that Dixon has extended its AFCA membership to allow more complaints to be made. This is the second time its AFCA membership has been extended since the firm went into administration two years ago.
AFCA said: “Work is well underway but it will take time to get through the large number of Dixon complaints.”
The additional complaints will add an estimated $65 million to the levy for the financial advice profession, FAAA said. This equates to a direct cost to every financial adviser of $4,165 on top of what has already been disclosed by the CSLR.
At the time of the announcement of the financial advice levy, the CSLR said the financial adviser levy of $18.1 million could spiral if more Dixon complaints were received or if claims were processed faster than expected.
As a result, FAAA chief executive Sarah Abood is calling on Jones and AFCA to provide a timeline of how long Dixon complaints will be proceeding.
She said: “This equates to a direct cost to every financial adviser of $4,165 on top of what has already been disclosed by the CSLR. This is a huge impost for the financial advice profession that is already dealing with declining numbers and spiralling costs.
“We urgently call upon the AFCA board to clarify the process and timing for that membership to end.
“We also urgently, again, call upon the government to review the funding model of the CSLR. Not only is it completely unfair, but it is also economically impossible for the small-business financial advice sector to underwrite the failures of large listed firms.
“Why should financial advisers pay for the failure of Dixon Advisory, a subsidiary of the large listed group Evans and Partners, which earned over $174 million in revenue last financial year?
“They should not, and they cannot. It is not too much to say that this matter represents an existential threat to our profession. The Minister has not yet responded to our many requests for engagement on this matter, and we call upon him again to work with us urgently to find a sustainable solution to this crisis.”
Nowhere else in the world do innocent bystanders have to pay for the losses incurred to investors due to failed businesses and enterprises.
Not possible to coninue if the cost is given to remaining advisors
In Australia this was the country of a “Fair Go”. This Government is using us. We need direct action and we need to fight as one and every adviser and Licensee needs to participate. Direct action should involve a boycott on the payment of all levies and taxes (ASIC) going forward and this should be directed by our Association (FAAA,AIOFP etc) with a full media campaign. We all throw in money in to fund this – that’s one levy I would pay. They are not listening and don’t intend to listen. They dont believe we can take direct action and we need to. Additionally we need to get the Libs/Nat on side (appreciably they were no better when in power) and make this a tax revolt – “no taxes without representation.”
I am reading a lot about the unfairness of CSLR, QAR etc etc and it is clear that there is massive inequity taking place.
The big problem as I see it is that I am only reading this stuff in industry publications – this is preaching to the converted. As soon as you mention any of this to people outside the industry, they don’t have even the slightest inkling of what is going on.
The debate simply has to get into mainstream current affairs so the financial advisory industry are not the only one’s who know about it.
I would like to see my industry representatives on the news, on a Current Affair, 7-30 report, 60 minutes, today tonight etc and making a big noise about this.
Please stop playing nice – take the gloves off and begin talking to the broader population and put politicians on notice. Let’s face it, the broader population are the ones that ultimately pay for this mess and they should know what the Government is doing.
spot on Mark