In a letter to Financial Services Minister Stephen Jones, seen by ifa, Association of Independently Owned Financial Professionals (AIOFP) Peter Johnston asked the minister to explain “why a senior manager of the failed Dixon Advisory Group, is now the director, financial adviser regulation unit – advice and investments division of Treasury”.
“Considering this person directed the Dixon advice strategy, and Dixon management were found guilty by the Federal Court for breaches of the best interests duty and failure to disclose their conflicts of interest with selling their own funds to clients, we find this rather confusing,” Johnston said.
“We are also wondering why ASIC, who successfully prosecuted the case, did not act against any Dixon management person.”
In June, Senator Andrew Bragg explored the potential Treasury conflicts of interest in relation to Dixon Advisory in a Senate economics legislation committee hearing, querying how many current and former Treasury officials had money invested with Dixon, and whether any had requested meetings on the matter.
Treasury confirmed that three staff members had “declared a possible conflict of interest in relation to Dixon Advisory”, while one former Treasury member “may have sought meetings”.
Bragg subsequently asked whether “there has been any undue influence on the department by people who have lost money in the Dixon fiasco”, which the Treasury officials denied.
Johnston had previously pointed to this issue in another letter to Minister Jones, calling out the role that “Treasury bureaucrats” have played in the construction of the Compensation Scheme of Last Resort (CSLR).
“The AIOFP, its members and we believe the wider advice community are greatly perturbed by the suspicious circumstances surrounding the DIXON/CSLR/CANBERRA BUREAUCRAT nexus and the preferential CSLR compensation treatment of Dixon victims when all other consumer victims of alternative product/advice failures are precluded,” Johnston said.
“We think there is a distinct ‘stench’ of either corruption, manipulation and/or profound conflicts of interest within the construction/operations of CSLR which was directed and managed by Treasury bureaucrats and/or their associates.”
The AIOFP noted that, among the reasons for this position, was that Dixon Advisory was based in Canberra until its failure in early 2022, with “several Canberra-based residents and federal government bureaucrats as private clients”.
In his latest letter, Johnston said the AIOFP was confused by the “notion of having a senior Dixon person inside Treasury when the CSLR decision was made to allow Dixon victims to be compensated including Treasury bureaucrats”.
“We have no choice but to pass this information onto the National Anti–Corruption Commission for consideration,” he said.
Last week, Johnston referred the AIOFP’s broader concerns around the role of Treasury in the construction of the CSLR to the NACC for investigation.
“This issue has enraged and galvanised the advice community like no other in living memory, it will substantially increase the cost of advice for consumers when the government’s objective should be to lower costs,” he said.
This week, the Financial Advice Association Australia (FAAA) also stepped up its calls for a public inquiry into the circumstances that led to the collapse of Dixon Advisory.
FAAA general manager policy, advocacy and standards, Phil Anderson, said that given the potential cost to the advice profession through the CSLR could reach $135 million, “our members are demanding to understand how this has got so out of control”.
“The answer is simple, it is all about the one entity – Dixon Advisory, which has generated a total of 2,773 complaints to AFCA, more than five times the annual number of complaints for the entire advice profession and multiple hundreds of millions of dollars in client losses,” Anderson said.
“How did things go so badly wrong? That is the question that we want to get to the bottom of. This is much more than just a few advisers providing poor advice. This is about an entire business that was focused on heavily selling in-house investment products, and one in particularly (URF), that turned out to be deeply flawed.”
There is no agenda in this question, purely seeking facts. How much does an independent financial adviser have to contribute to fund the CSLR each year? Also are independent advisers purely paid a flat dollar upfront fee for advice? E.g. there is no commissions percentage based rem at all, permitted insurance trails or anything like that?
This is a completely irrelevant question in regard to the topic at hand.
I don’t see the point of your question ?
Treasury officials as investors and victims of Dixon’s and Nerida Cole appointed to oversee financial adviser regulation and standards???????………….This simply doesn’t stack up.
There must have been a connection within Treasury regarding this bizarre appointment.
It is untenable this person is in this role.
Anyone employed by Dixon should not be in treasury let alone a senior leader. Anyone responsible for westpacs fees for no service should not be employed by ASIC and make defamatory statements about unaligned advisers they have no exposure too. Let alone a senior executive. Disgusting
Perhaps ASIC has a serious cultural problems within?
If anyone from Treasury invested with Dixon they should be disqualified from their job on the basis of stupidity. It looked like dodgy conflicted advice, it sounded like dodgy conflicted advice and it was dodgy conflicted advice. The average investor has a different level of perceived knowledge to Treasury staff in my view.
Treasury believe in the Compare the Pair ads right? Low fees, high returns, profit to members, not for profit, socially aware, super returns and super advice etc? I wonder what snake oil sales sound like?
Who was the lone treasury staff member that did not invest with Dixons…? Well done I say!
Funny.
They likely went to another vertically integrated product provider – affordable advice right?
What could possibly go wrong?
Hey anonymous…are you serious ?!?!? He is trying to get to the bottom of this and get rid of the ridiculous CSLR cost all because of Dixon’s failure…Where is the positive in all this, you must be from Treasury or CSLR, as letting these crooks get away with is only positive for who is in on this scam! No self-respecting adviser would say something like that. ? That is the dumbest comment I have ever seen !
Why isn’t Nerida Cole named in this article IFA ???
Running scared?
Well you see, there’s the laws of defamation. IFA would have to run a public interest case. Naming that person ( or persons) in a publication (and not worrying about the person being named in anonymous comments) is probably a little too dangerous. And remember if that person did sue for defamation, our whole campaign against CSLR would be put in abeyance because there was court action pending.
Better to have a referral to the NACC. Or to use an old analogy, you roll them, get someone else to fire them
Do conspiracy theories looking backwards do any good for us going forward. Will this alter anything with CSLR – I very much doubt it. Peter – do something positive rather than just look at negatives all the time
Maybe you are not being held responsible for funding the Dixon debacle as you are obviously in the minority!!
Keep up the good work on behalf of your advisers Peter.
Mate – I am not an AOIFP member, but I can tell you he has done a lot more positive stuff than the AFA/FPA/FAAA folk
he has done a lot more positive stuff than the AFA/FPA/FAAA folk – all put together !
Lots of words – is he taken seriously by the Pollies – I can tell you no. He is regarded as annoying and offering very little constructive comment
I think conspiracy mantra is a little unfair – something stinks around Dixons and a public inquiry and an explanation about Nerida Cole is warranted. BTW positive approach has gotten us royally screwed time and time again. I’m for gloves off.
Youre mistaken this is fact, not conspiracy and the Profession deserves a response given we are footing the Bill. Seems like a co flicted comment from a vested interest covering their thievery
Hey Anonymous put your name to that comment!
and could you please show me the great initiatives you are undertaking to make our lives better?
No one is into Conspiracy theories here – just following the money – advisers money.
There are plenty of other places more appropriate for your questions “Do conspiracy theories looking backwards do any good…”
Not conspiracy theories when facts are plain to see! If conflict of interests did create this outcome then yes the CSLR could totally be revisited. This comment and the attitude is why the industry is where it is right now, if you believe you have done the right thing as an Adviser then you have to make a stand. Do you think lawyers would cop what we’ve had to put up with? Not on your life….
Why are clients of Dixon’s the only ones able to be compensated through CSLR?
Completely agree with this. the AIOFP will never achieve a thing for our industry. Always negative, going after the pollies….Peter’s credibility is gone. People on here commenting in support of them might feel good about them “asking the hard questions” but the reality is that Stephen Jones, the only person that matters, would tune out as soon as Peter J speaks. The association needs to disappear and stop embarrassing us all.
How did Nerida Cole ever get appointed to this role with Treasury given the debacle at Dixons that she oversaw.
Probably the same way Alan Kirkland, ex CHOICE CEO, was appointed an ASIC Commissioner. In both cases, are They telling us they were the best candidates?