The Australian Financial Complaints Authority (AFCA) has confirmed it will start working on Dixon Advisory complaints from 1 December with a view to issuing determinations in time for the Compensation Scheme of Last Resort’s (CSLR) introduction in April 2024.
Speaking to Money Management, Shail Singh, lead ombudsman for investments and advice, said the body is waiting to complete the consultation period of the consultation into how it determines complaints against financial advisers.
The consultation will cover how AFCA’s approach document considers:
- Liability and compensation in relation to financial advice firms and responsible entities (REs) where the advice firm has provided advice on interests in a managed investment scheme (MIS), including those MISs that have subsequently failed or become insolvent.
- Proportionate liability statutes in relation to complaints involving financial advisers and MIS.
- Its powers to join a party to a complaint if the party is an AFCA member.
- Fairness when apportioning loss in these complaints.
Once this has concluded, Singh said AFCA will start issuing decisions on Dixon Advisory complaints from 1 December onwards. Earlier this month, AFCA chief executive David Locke told the Senate Economics References Committee that if all Dixon complaints were paid out, it would total $357 million.
Some 1,851 complaints have been received by AFCA regarding Dixon Advisory and the majority have been on pause awaiting clarification on the CSLR as Dixon has gone into voluntary administration.
Singh said: “We are currently doing an approach on financial advice which finishes on 1 December. Once we’ve got that out, we will then start to go through Dixon complaints. We won’t be finalising any yet as the consultation relates directly to Dixon, so we are going to finish that first then start issuing Dixon determinations.
“CSLR won’t be operating until April, so our aim is to get those decisions through for that time. There’s 1,700, 1,800 of them to go through so it is a time-consuming exercise.”
Asked about the funding of the CSLR, Singh said he is aware of the funding issue raised by the industry. The CSLR will be initially funded by the government, but from 1 July 2024, it will move to being funded by the industry.
“I know that is an issue, but we don’t determine funding, and we need to give it due consideration, so we are doing them as quickly as we can, but we can’t make any commitments on timing. It takes as long as it takes to get through them. Funding is a matter for government.”
