A public inquiry is required to ascertain how the Dixon Advisory group failed and why its parent company has shouldered no responsibility, but has picked up around 80 per cent of the advice business’s former advisers and clients, according to the Financial Advice Association Australia (FAAA).
FAAA policy, advocacy and standards general manager Phil Anderson said the failure of Dixon Advisory and the shifting of the financial losses onto the wider advice sector has not been fully addressed by the Australian Securities and Investments Commission or the government during the creation of the Compensation Scheme of Last Resort (CSLR).
“I have been asked by a number of financial advisers about what I am most angry about,” Anderson revealed in a paper addressing the collapse of Dixon Advisory and the flow-on effects to the CSLR.
“This is a really difficult question to answer as I am angry (not just annoyed) about so much of what has happened with the whole Dixon Advisory debacle and the impact that it has had on the CSLR. And the situation has only continued to get worse over recent months as more and more has come to light.”
Anderson noted the fact E&P Financial Group, which owns Dixon Advisory, was able to put it into administration and leave the financial burden to advisers was one of his chief objections to what had taken place.
He was also critical of the government for starting the CSLR with a backlog of legacy claims, while backing out of a promise to fund the first year of its operation and failing to disclose any information about the potential costs of claims against Dixon Advisory that would come through the CSLR.
Returning to his first objection, he stated: “The fact that E&P Financial Group simply put its subsidiary Dixon Advisory into administration in full knowledge of the consequence for clients and the rest of the financial advice profession, and in the context of the expected establishment of the CSLR, is very concerning.”
According to Anderson since Dixon Advisory had gone into administration in January 2022, E&P had appointed 36 of the 45 Dixon Advisory advisers around the time of going into administration to another subsidiary, Evans & Partners, and transitioned 78 per cent of the failed firm’s clients to the new business.
“The thing that is likely to infuriate the advice profession even more is that given the high percentage of Dixon Advisory clients who moved over to Evans & Partners, it will be E&P that stands to benefit from the receipt of additional funds under advice when the compensation is paid by the CSLR into the predominantly SMSFs of the former Dixon Advisory, now Evans & Partners, clients,” he explained.
“Getting to the bottom of this will only happen through a public inquiry. We are continuing to call for a public inquiry and we ask for your support to achieve that.”
