Final Dixon complaints tally stands at 2,773 complaints

The Australian Financial Complaints Authority (AFCA) has confirmed that Dixon Advisory is no longer a member following a vote.

It was announced at the end of May that Dixon Advisory’s administrators would have 21 days to make any submissions regarding the proposed expulsion and the decision would be considered by the board. 

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Dixon Advisory had previously been required by ASIC to remain an AFCA member in order for consumers to submit complaints, but this requirement ceased on 8 April. This prompted AFCA to consider whether Dixon Advisory should remain a member, especially in light of the high volume of complaints being received and the financial impact this was having on the financial advice sector.

A board meeting was held on 20 June and the board decided that Dixon Advisory would indeed be expelled, taking effect from 30 June. 

The organisation said: “AFCA cannot accept any new complaints about Dixon Advisory. This is because AFCA can only accept complaints about firms that are current members of the AFCA scheme.

“The expulsion of Dixon Advisory does not prevent AFCA from considering and finalising complaints received on or before 29 June 2024.”

As of 30 June 2024, some 2,773 complaints had been received by AFCA related to losses under Dixon Advisory. AFCA previously stated they had doubled the staff on the team to ease the backlog.

This figure is up from 2,492 complaints in May, a rise of 281, indicating individuals rushed to get their complaint in prior to the firm’s AFCA expulsion. 

“Work is well underway, but it will take time to get through the large number of Dixon complaints. We thank people for their patience. It is important that the work is conducted with the usual rigour that is required.”

Appearing before Senate estimates at the start of June, AFCA chief operating officer Justin Untersteiner said estimated losses from Dixon Advisory totalled $458 million. 

“If we look at open complaints – purely those claims that have been lodged by consumers and are yet to be vetted by AFCA, some may be lower than this, there is also a cap of $150,000 that hasn’t been taken into account – we have complaints that were lodged at the introduction of the legislation of $312 million. Further claims beyond that date total $146 million. 

“In the closed category, we have awarded $5.7 million in losses.

“Typically complaints relate to the advice, conflicts of interest and the appropriateness of the advice. But we have only assessed a small number out of many.”

FAAA’s reaction

Responding to the final figures, the Financial Advice Association Australia (FAAA) welcomed the long awaited cessation of Dixon’s membership, which provides certainty on the number of Dixon complaints that AFCA will be investigating.

However, FAAA chief executive Sarah Abood expressed concern over the “serious flaws” in the CSLR’s current funding model and its impact on the advice profession. 

“Now that Dixons’ AFCA membership has finally ceased – after two false deadlines, and almost 2.5 years after being put into administration – we can see the full potential impact of this matter on our profession and the costs we may need to pay for it, via the CSLR,” she said.

“Unsurprisingly, a number of additional complaints were made by Dixons clients in the final weeks of AFCA membership, and the total number of cases registered with AFCA now stands at 2,773.

“While this is less than the administrator’s estimate of 4,606 investors whose losses in the US Masters Residential Property Fund (URF) made them potential creditors, this is still a huge number of complaints that will likely take years to process.”

Abood believes the Dixon scandal is on such a massive scale that it warrants a public inquiry into the circumstances that led to the failure, as well as recommendations to prevent it from happening again. 

The FAAA put forward the following actions to be “urgently taken” in order to fix the CSLR funding flaws:

1. The CSLR funding model must be prospective, not retrospective.
2. The government needs to pay the first full year of operation of the scheme as was originally promised, rather than just 3 months.
3. The government should re-instate the original sector cap (a maximum of $10 million that could be levied per sector), rather than the $20 million that currently applies.
4. The advice sector should be indemnified against future CSLR claims.
5. The government must act to ensure that large vertically integrated groups cannot avoid paying fair compensation to consumers.
6. The government must ensure that all other avenues for client compensation have been exhausted before financial advisers are charged.
7. A party must be appointed to defend complaints against entities no longer in existence.

She continued: “We consider these actions to be urgent in order to secure a sustainable and fair funding base for the CSLR, so that consumers can continue to receive fair compensation if they have suffered a loss due to poor advice.”