The peak financial planning body has called on the government to allow consumers who lost money as a result of the Dixon Advisory collapse to share their experiences as part of the Senate inquiry into the matter.
The Financial Advice Association Australia (FAAA) has made the call having recently spoken to a former Dixon Advisory client and gleaning the extent to which they understand the facts of the situation.
“We discussed the Dixon Advisory business model where an investment committee, comprised of very senior business people, decided how much each Dixon Advisory client would invest in each of the Dixon Advisory-related product offerings,” FAAA policy, advocacy and standards general manager Phil Anderson shared in a recent LinkedIn post.
“He could not accept that this was correct. His adviser gave no indication that he was acting upon directions from above.
“When I explained that the URF (US Masters Residential Property Fund) had not been subject to independent research and that the vast majority (85 per cent to 95 per cent) of the investors in the various URF products were Dixon Advisory clients, he was amazed and appalled. He assumed that financial advisers across the country had recommended the URF and related products.”
According to Anderson, the conversation indicates adviser participation is also necessary in the hearing process.
“This highlights the need to hear from these advisers. How did the business model work? Why did they follow these instructions?” he said.
Further, he identified elements of the collapse that require more detail, such as why 78 per cent of clients involved remained being serviced by the group, what explanation was provided to them as to why so much money was lost and the remediation process that was offered for these individuals.
“We are looking forward to the Senate inquiry hearings commencing and listening to those who really know what happened and how things went so wrong. It is only with this knowledge that what needs to change can be identified and addressed,” he noted.
“It is the CSLR (Compensation Scheme of Last Resort) that has helped to highlight what went wrong at Dixon Advisory. Understanding the Dixon Advisory story in detail will help to ensure that it does not happen again and that the serious problems with the CSLR can be fixed.”
