The Financial Advice Association Australia (FAAA) has ramped up its campaign for a public inquiry into the collapse of Dixon Advisory and how that will be handled by the Compensation Scheme of Last Resort (CSLR) by writing to all members of parliament urging them to support the move.
The association has raised concerns about the collapse of the advice group and the actions of its parent company, which continues to operate and provide services to many of the same clients through the same advisers, while the sector may have to fund $135 million in compensation claims.
FAAA chief executive Sarah Abood said it had met with Treasury and started working to address some of the issues around the operation of the CSLR, including the ability of parent companies to place an advice subsidiary into administration and transfer business operations, but the association still wants to see an open inquiry into past events.
“It is essential that we learn the full extent of the issues behind the multi-hundred-million-dollar Dixon Advisory scandal to ensure it is not repeated,” Abood said.
“A public inquiry would provide clarity around the key questions that remain unanswered, including how the money was lost in the Dixon Advisory scheme, what role directors and senior management played and why ASIC failed to adequately investigate and take action in a timely way, despite numerous complaints from as early as 2008.”
FAAA policy, advocacy and standards general manager Phil Anderson added: “It is crucial that we understand why the fallout from this scandal has focused primarily on financial advisers, while leaving the business leaders and their investment product, as well as broader systemic issues and the firm’s questionable business model, unaddressed.”
Abood said the FAAA met with Financial Services Minister Stephen Jones in August to raise its concerns about the CSLR, including its cost and whether it was operating as a true last resort.
“This was supposed to be a last resort scheme to compensate Australians who were the victims of poor or negligent financial advice when all other avenues of restitution had failed,” she said.
“Instead, in the absence of true accountability for those responsible, it’s become a scheme of first resort for the many Australians that were caught up in the Dixon Advisory scandal.”
