With the indicative ASIC levy expected soon, the Financial Advice Association Australia (FAAA) has queried whether the cost of action against Dixon Advisory will impact 2023–24 figures.
Last year, the 2022–23 levy came out on 28 June and was $3,217 per adviser for licensees who provide personal advice on relevant financial products to retail clients. This was later reduced down to $2,818 following backlash. The levy had been temporarily frozen for two years in light of the COVID-19 pandemic at $1,142.
With Dixon complaints having a big impact on the Compensation Scheme of Last Resort (CSLR), advisers are right to wonder whether it will have a similar impact on the funding levy.
Speaking at a roundtable, general manager for policy, advocacy and standards Phil Anderson, said: “There have been questions asked of ASIC as to how much it will impact the levy.”
ASIC is currently undertaking action against a former Dixon director Paul Ryan for alleged breaches of directors’ duties regarding his actions in the lead-up to the insolvency, which are alleged to have disadvantaged creditors.
However, the action is a corporate matter, Anderson said, rather than one affecting advisers.
“Clearly ASIC are spending money on this, but the advice profession won’t be paying for it because it isn’t an advice-related matter; it’s about directors’ duties.”
FAAA chief executive, Sarah Abood, warned though that advisers could still end up footing the bill indirectly at a later date via the CSLR.
Anderson also suggested a public inquiry should be called as to how the Dixon matter became such a big scandal affecting so many clients and how it can be avoided in the future. Over 2,500 complaints have been made to the Australian Financial Complaints Authority and alleged losses total $458 million.
Appearing before the Senate economics committee earlier this month, ASIC responded to questions from Senator Andrew Bragg regarding whether it would be pursuing individual advisers. ASIC replied that it would not be doing so as it was Dixon which held the AFSL and had the obligation to ensure its advisers were in full compliance with the Corporations Act.
Anderson said: “I very much get the sense that ASIC has closed the books on Dixon Advisory. I would ask the question as to whether they should be re-opening the book and have a look at how that business model was allowed to operate and so many clients were pushed into that in-house product in the way they were. That would be worth having a closer look at.
“We continue to look into the matter, it just keeps getting bigger and bigger. We need to be very focused on understanding what happened and what needs to be done to ensure this doesn’t happen again, and that the CSLR is a sustainable solution going forward.
“We think there should be a public inquiry into this. We think this is such a big scandal with so much money lost and so many clients impacted. It’s worthy of a public inquiry to understand what happened.”
The presence of the Dixons Head of Advice who was also on the investment committee for Dixons, now works within Treasury in their Financial Adviser Regulation Unit. This would be a great line of inquiry for Senator Bragg to pursue further and about how any conflicts were managed, as well as this persons connection to Treasury. The public should know the number of federal bureaucrats who have personally lost money due to Dixons and whether they had any input toward the CSLR too.