The Financial Advice Association Australia (FAAA) general manager for financial advice, Phil Anderson, believes the CSLR levy could reach $100 million if Dixon Advisory complaints to AFCA are allowed to continue.
Last week, the Australian Financial Complaints Authority (AFCA) announced it has now reached almost 2,500 complaints about Dixon Advisory, receiving 544 in 76 days between 15 February and 30 April.
This is far higher than the 300 additional complaints that had been estimated in the CSLR actuaries report released in March.
In its high scenario assumptions, it said: “An additional 300 complaints reported early in 2024 (assuming they are settled concurrently with the reported DASS complaints) could increase the second levy period amount to $24.2 million.”
However, this assumption was based on the idea that Dixon Advisory would not renew its AFCA membership, which it subsequently did on 10 April to allow consumers to continue to make submissions. This is the second time that Dixon has extended its AFCA membership.
These additional complaints equate to a direct cost for every financial adviser of $4,165 on top of what has already been disclosed in the CSLR levy, the FAAA said.
Writing on LinkedIn, Anderson said: “Using the CSLR actuaries assumptions of $107k per complaint and $12k for ASIC claims handling costs for each complaint, that pushes the potential cost to the advice profession above $100m. Yes $100m being unfairly forced upon a largely small business sector that has declined by 45 per cent in the last five years.
“The 10 largest financial institutions are already being billed over $200m for Dixon Advisory. And the rest will likely land on the plate of the advice profession unless something drastic is done. All the warnings with the CSLR are coming home to roost – black swan events and moral hazard primary on that list.”
He also questioned why the government has failed to put together a regulation impact statement or financial projections to assess the estimated effect on financial advisers. The government initially stated it would fund the first 12 months, but this was later reduced to three months at the start of the scheme.
“The government promised to pay for the first 12 months of claims and costs, but then reduced it to less than three months and as a result are only paying for one Dixon Advisory case. The disclosure on this is appalling – no regulation impact statement and meaningless trivial financial projections.”
