The SMSF Association has called on the federal government to pay all claims lodged with the Compensation Scheme of Last Resort (CSLR) related to the failure of Dixon Advisory & Superannuation Services in line with its initial promise to fund the first year of operations of the scheme.
SMSF Association chief executive Peter Burgess said the recent decision by the Australian Financial Complaints Authority (ACFA) to terminate the membership of Dixon Advisory from 30 June 2024 meant a limit had been made on the complaints that could be funded by the CSLR.
As such, Burgess added the government should live up to its initial commitment of funding the work of the CSLR so as to remove the financial burden of compensation claims on the financial advice profession.
“While we welcome this announcement, the cost of Dixon’s compensation claims lodged before the end of the financial year but paid after could still amount to many millions of dollars that ultimately will need to be paid for by the advice profession,” he said.
“We think there is a perfect opportunity now for the government to step in and, like the ACFA, draw a line under the advice industry’s financial responsibility by agreeing to cover all unpaid Dixon compensation claims.”
He noted when the CSLR was first announced the government indicated it would cover the first year of the scheme, but has since reduced this period to three months and due to the slow of complaints only one Dixon compensation case had been funded by the government.
“We are urging the government to show their support for the financial advice profession and agree to this simple request,” he said, adding the association remained concerned about the CSLR’s funding model.
“We support the CSLR in principle, but expecting small advice firms to pick up the tab for the failures of a large advice firm, which is a subsidiary of an ASX-listed company, is both inequitable and contrary to the government’s stated policy of making accessibility and affordability of advice a priority.
“Further, the exclusion of managed investment schemes from the CSLR’s funding model risks pushing more costs onto the advice professions and driving more advisers out of the system at time when they are needed most.”
