Responding to questions on notice from Liberal senator Andrew Bragg, the Australian Securities and Investments Commission (ASIC) has detailed how many clients and advisers moved from the defunct Dixon Advisory to parent company Evans and Partners (E&P).
The written questions, which the senator has directed to ASIC as part of budget estimates, included inquiries into the transition of former clients of Dixon Advisory to E&P.
“How many of these Dixon Advisory clients moved to other subsidiaries within E&P Financial Group and how many of these clients who moved have submitted complaints to AFCA, which will need to be paid for by the CSLR?” Bragg asked.
“Additionally, how many financial advisers transferred from Dixon Advisory to Evans and Partners?”
In response, ASIC said that about 3,280 of the 4,100 Dixon Advisory & Superannuation Services (DASS) clients had, by May 2022, moved to E&P.
“Every DASS client was given a choice, with some choosing to leave and the majority deciding to stay withing (sic) the group,” ASIC said.
“Most DASS clients already had a standing relationship with other entities within the group. For instance, clients may have received investment advice from DASS, but the administration of their self-managed superannuation fund was conducted by other entities, or they received broking services from another of the AFSL holders within the group.”
However, ASIC said it had no knowledge of how many Dixon clients that are now with E&P had lodged AFCA claims, “nor do we have visibility of how many may ultimately result in claims being made under the Compensation Scheme of Last Resort”.
Speaking with ifa in May, Financial Advice Association Australia (FAAA) chief executive Sarah Abood raised concerns around the role of Dixon parent company Evans and Partners (E&P), including that it would indeed be a beneficiary of CSLR payments.
“When this compensation is paid, much of it will go to E&P as they still have many of these clients on the books,” Abood told ifa.
“It’s certainly what makes me the angriest, that advisers are on the hook for the failings of a listed entity. It’s unbelievable.”
On the issue of Dixon advisers, the regulator explained that between 1 January 2021 and 10 May 2022, E&P appointed 39 advisers who were Dixon representatives.
“Of those, 27 were appointed to an E&P role that involved the provision of financial advice,” ASIC said.
“Some of the advisers were appointed to E&P well before DASS entered administration on 19 January 2022. Since at least 2000, E&P Financial Group Limited (EP1) have made public disclosures about its plans to consolidate the wealth management group, which consisted of several entities that provided financial services (including DASS).”
‘Most’ misconduct reports after ASIC investigation began
Despite Bragg relaying that the sentiment among financial advisers was that the problems with Dixon Advisory “have been known for many years and had been reported to ASIC”, the regulator said the majority of the misconduct reports it received came after it had commenced its “first investigation”.
“Between October 2008 and September 2022, ASIC received 60 reports of misconduct in relation to DASS,” it said.
“As set out in ASIC’s prior response in Set 73, most reports were received 2019 or later, being after ASIC had commenced its first investigation.
“The earlier reports resulted in ASIC conducting surveillances or were subject to no further action. One such surveillance subsequently led to the commencement of an investigation in July 2019 relating to suspected breaches of best interest duties and conflict of interest.”
The regulator also addressed its decision to extend Dixon’s AFCA membership a year to 8 April 2024, which increased the amount of time available for affected clients to lodge complaints with AFCA.
“ASIC may, as occurred in this case, impose conditions as part of administrative decisions. In the context of a licence suspension or cancellation, this can include a condition to maintain AFCA membership (although the decision to expel or cancel a licensee’s AFCA membership is a matter for AFCA),” it said.
“We have imposed such conditions on regular occasion – including in the case of DASS for a further year after its license cancellation – to preserve the rights of clients to make claims to AFCA.
“This is because complaints can only be made against entities which are AFCA members; if an entity’s AFCA membership ceases, no further complaints can be accepted by AFCA.”
Following the eventual expulsion of Dixon from the AFCA scheme, the authority detailed that it had registered 2,773 complaints against Dixon Advisory.
How about the ASIC reps who failed pay the cost along with Dixons/E&P – advisors are not ASIC financiers and never signed on to be. Stop destroying small good businesses because you are employing incompetent staff who like to go home at 4pm and adopt a government employee lazy approach ASIC. It may not be that now but hasn’t it been in the past???
ASIC seems to allow ASFL’s to have in-house related products on approved lists – the problem will continue forever and Financial Planners somehow continue to get the blame?
Perhaps Financial planners are being let down by these ASFL’s?
Should product providers be allowed to provide advice?
[i]It is amazing how the advisers have become the targets here, when they were probably following the Approved Product Lists, the risk frameworks developed by the AFSL holder and the advice of the investment committee.[/i]
[i]The main issues here are[/i]
[i]1. Why was the compensation scheme made retrospective when there have been a number of financial product fiascos that weren’t bailed out by the government or the industry – the blame here should be on the architects of the scheme, Treasury and the Government.[/i]
[i]2. The way in which AFCA and the government have calculated “losses” of clients. What happened to the “self managed” part of operating an SMSF. Surely the clients/trustees have to take some responsibility for following that advice. Secondly, vertical integration can’t just be bad when the investment made a loss. Did AFCA look at the related party investments which made clients money and offset that against the losses of the funds that lost money? I suspect not.[/i]
The vast majority of SMSF members around the country would have no real understanding of their legal obligations as Trustees of their own fund or as Directors of a Corporate Trustee arrangement.
They have a sense of self management and they love the weekend BBQ discussions around them crowing about the benefits of their SMSF, but the majority do it because someone told them to do it as in their Accountant, Financial Planner or even worse, their best mate with a few beers under their belt at the BBQ.
WHAT IF these advisers are the ones who have always worked hard for these clients
WHAT IF these advisers inherited portfolios full of Dixon products and spent years cleaning them up
WHAT IF these advisers are the ones who have rebuilt retirements, savings and portfolios for these clients
WHAT IF these advisers never got paid for related products, were using a mandated IC approach and were lied to all long
WHAT IF these advisers risked their careers by overhauling portfolios away from these models while they were still at Dixons because they believed it was best for the clients (and it was…)
WHAT IF these advisers worked 24/7 during the covid period to position clients correctly and capitalised on market recovery.
WHAT IF these clients have benefitted greatly from these advisers and now have an incredibly close bond with these advisers. WHAT IF that is the reason that so many are still with E&P. WHAT IF these clients would now follow these advisers anywhere.
WHAT IF we follow the money. Alan Dixon and his cronies are the crooks. We need to chase them.
WHAT IF the people to blame left Dixon years before it failed and left others to clean up the mess. Look at those that left between 2016 and 2020. They were the ones that were Alan Dixon’s blind supporters.
WHAT IF Evans & Partners has provided an environment for these advisers to make good the sins of those others.
WHAT IF these advisers dedicated years of their life, getting paid poorly, sacrificing their relationships and health to make things right.
WHAT IF these advisers hate what this has done to the industry.
WHAT IF ASIC and the industry bodies have all the information, know what has happened which is why they haven’t pursued advisers, but haven’t taken action up the chain.
WHAT IF our focus is in the wrong place. We need to target the directors of Dixon, the failed investment scheme, the “Investment Committee”, the lack of earlier intervention.
WHAT IF these advisers went through hell then and are going through hell now.
It appears ASIC only goes after Advisers? How many Bank executives did ASIC go after following the RC? Probably a good argument for the removal of AFSL’s in there somewhere?
What if a proper investigation was conducted to answer all those what if’s? I am still unsure why I should be paying compensation for something that I had no involvement in whatsoever.
And no ability to prevent?
What is the advisers just resigned and moved employers?
what if, you weren’t anonymous. You might be taken seriously.
How Evans and Partners were able to ringfence these liabilities in DASS remain a mystery to me.
According to the Administrators DASS had no employee’s or Authorized Representative’s, they had long been transitioned to E@P. How they have avoided these liabilities and allowed the Advice Industry to pick up the bill to clean up their mess is one of the great travesties to befall the advisers who have survived the great cull.
What if Dodgy Dixon’s was Illegally PHOENIXED both Advisers and clients to E&P.
Would ASIC do anything about such Illegal Phoenix activity ?
Useless corrupt ASIC
Real Advisers must refuse to pay CSLR.
I will NOT pay for corrupt useless ASIC inaction.
Happy to answer some of these “hypotheticals”
WHAT IF these advisers inherited portfolios full of Dixon products and spent years cleaning them up – then there would be no client loss for advisers to pay
WHAT IF these advisers never got paid for related products, were using a mandated IC approach and were lied to all long – surely they would report to Asic and professional bodies and there would be sufficient evidence to blow open the lid on Asic complicity to corporate fraud.
WHAT IF Evans & Partners has provided an environment for these advisers to make good the sins of those others.- then they should also make good the advisers that had nothing to do with this and pay the compensation themselves. After all they clearly were the beneficiaries of the ongoing fees and continue to be.
WHAT IF these advisers hate what this has done to the industry.- they should provide all and any material to media (anonymously if fearing retribution) to blow the lid open.
WHAT IF ASIC and the industry bodies have all the information, know what has happened which is why they haven’t pursued advisers, but haven’t taken action up the chain – take it to the media to expose the truth. Bundle up all the evidence you have and send it to your professional association and tell them if they don’t go public with this that you will.
WHAT IF these advisers went through hell then and are going through hell now – you will feel better when you unburden yourselves and expose the truth. Your peers and fellow professionals will rally around you and support you and be truly greatful that members of our profession will not only do the right thing by our clients but by each other and the profession as a whole.
If the what ifs you propose are not hypothetical then do what is right.
You say it as if “if the media exposes the truth, everything will be OK”. In the unravelling of it all, it felt like the media made it all a little worse because of their own personal agenda and dramatizing, causing panic even where it was unwarranted.
Does it make sense that a whole firm of advisers would actually band together to sell something they didn’t truly believe was appropriate? Did they even receive any commissions for in house products, and would they risk their whole career and long hours of work on something so morally wrong?
What if the clients actually liked the firm, the founding family, the culture, their advisers and the products, and made a conscious decision to invest?
What if everyone was just blindsided until it was too late?
There is something very murky going on here.
There are people in places helping people in places.
The Dixon/EP mess is being massaged by people of influence & it is paramount this is dismantled & shown exactly for what it is…corporate crime.
As someone who was at Dover and went through all of the troubles from ASIC, this is appalling. I don’t believe there were any material losses for any clients at Dover?
This is very unfair.
Some may comment Dover planners were basic though at least they did the right thing by clients.
Dover alumni we should do a class action against ASIC…
Thoughts?
I agree! Dover was totally mishandled by ASIC and should have been done much better. There was a vendetta to settle in that case. Now it appears with Dixon, ASIC is protecting people they know.
Why isn’t the parent liable for the debts of the subsidiary?
Surely there is some kind of value shift from Dixon’s to e&p that the liquidators can go after to put towards the compensation? 3000 clients @ average ongoing fees of 5k is 15 million at 2 or 3 times market rate is 30 to 45 million. Can ifa confirm if this avenue was pursued? Otherwise this is just classic phoenix scheme but apparently with full regularity knowledge and consent. Bank afsls and subsidiaries were separate to parent company however they paid there compensation due to reputation damage. The blow torch needs to be applied to e&p due to this unconscionable and unethical conduct. The individual advisers that knowingly participated in this scheme and BID failures need to be bought to light as well. What benefits / bonuses did they receive by providing this conflicted advice? What investigations were made into the head of advice at Dixon’s? Were any of the advisers a member of a professional association…faaa? Can / should the associations conduct there own disciplinary investigations into the conduct of their endorsed advisers? Perhaps this is a chance to regain some control and credibility for the profession by uncovering some truths and then send to abc/ fin review for an expose as clearly Asic and Treasury are content with their oversight and outcome.
ASIC should be held responsible
They (ASIC) were aware of the business model at the time, they fined Dixons in 2015 for misleading SMSF advertising, KPMG called Dixons out with it’s merger to Evans & Partners (2016) about it’s conflicted business model and the excessive fees charged by Dixons to the URF fund as part of their due diligence requirements. The above confirms ASIC received numerous complaints too.
What were ASIC doing from 2015 to 2017? The whole AFCA compensation relies on poor advice for conflicts of interests, and incorrect asset allocations. It’s hardly a labyrinth to work out that Dixons were a bunch of shonks providing poor advice! Did ASIC actually look at a sample of SoA’s from Dixons? It wouldn’t have taken long to see what was going on.
Even Sarah Court from ASIC stated ASIC were concerned about Dixons breaching their best interests duty.
“ASIC investigated the provision of financial advice to a subset of Dixon clients in the period 2015 to 2019 because ASIC was concerned that advisers that were employed by Dixon were not providing financial advice that was in those clients’ best interests”
https://www.aph.gov.au/-/media/Estimates/economics/bud2425/Hansards/Economics_Legislation_Committee_2024_06_04_Final.pdf?la=en&hash=F493B56240FC600CBB7B75EF747604DBE6F42F93 (pg22)
Advisers should not be paying compensation for the complete failure of ASIC to do it’s job!
This is an absolute disgrace
How does E&P maintain its fit and proper director status given it knew clients would lose money and took no action.
How did the advisers change AFSL and retain accreditations if it was found the advice was poor. Surely, they have all been sanctioned by ASIC.
E&P knew what was happening and allowed it knowing no legal recourse. I thought all AFSL and Advisers had to abide by the code of ethics of the industry organization they are members of. How do they meet the code of ethics?
What is the point of paying PI if we can all just get CSLR to pay for any client complaints and issues? What a joke this has been – classic ASIC incompetence.
What is the point of being an Adviser if you heal financial responsible for someone else’s product failure? What happens if a large Product fails – or the next black swan even? Advisers paying for this Dixon Product had no influence over the product – ASIC regulated Dixon so why are we not holding ASIC responsible?
This was/is phoenixing. Furthermore, the administrators report to creditors of the entity put into voluntary administration suggests it is likely there were shadow directors. Has ASIC investigated this?
This is filthy.
No CSLR payments by advisers until this is fixed up.
The stench of corruption gets stronger by the day. This circus requires more than a public enquiry. Nothing less than a RC required to expose the corrupt & conflicted & held to account.
Let’s put this into perspective – 39 former Dixon adviser with approximately 3,000 of the 4100 Dixon move to a new AFSL and all the advisers across the industry pay for the compensation? All practices really need to question how well ASIC has been involved in the process when asked to pay their next ASIC levy. Absolute disgrace Dave
I cannot think of another time in recent memory where a serious company (that is, one that markets itself as responsible and credible), and certainly not one that is listed, allowed a wholly owned subsidiary to go into administration and refused to honor the liabilities of that subsidiary. Who does that?
And why is everyone (the media, ASIC, FAAA, etc) referring to this as a Dixon Advisory debacle…its an Evans and Partners issue. Why are people allowing their brand off the hook?
This is not surprising but utterly disappointing, E&P should be on the hook for these remediation payments, not the beneficiary of additional FUM.
With this and the continued regulatory horror show; not sure why I even stay in this industry
Sarah Abood – “It’s certainly what makes me the angriest, that advisers are on the hook for the failings of a listed entity. It’s unbelievable.”
So what are you going to do about it?
FAAA is good at highlighting issues but pathetic at fixing them.
Bingo
So 60 ASIC reports of Dodgy Dixon’s from 2008 and they did = NOTHING !!!
39 Dodgy Dixon’s Advisers and 3,000 Dodgy Dixon’s clients shunted sideways to E&P and this does not SCREAM PHONIX SCAM !!!
Oh ASIC you are so pathetically useless, inept and costly to Real Adviser’s and the Australian public.
Disgusted in ASIC
I feel for you, and i left the titanic in 2019
I was rescued from one of the lifeboats in 2021…
“It’s certainly what makes me the angriest, that advisers are on the hook for the failings of a listed entity. It’s unbelievable.”
I’m sure everyone is scared now?
What rubs more salt into the wounds is that the then Chairman of Dixon Advisory and Managing Director of E&P, David Evans, splashed down some $14M on a holiday house at Sunshine Beach in Qld in December 2020, around the time of Dixon troubles…. his other ‘weekender’ in country Victoria featured on Best Homes Australia recently……
Now, that’s “disgusting” Sarah….
ASIC let Dodgy Dixons float on the ASX with full knowledge of the MIS fiasco.
Dodgy Dixons directors pocket $10’s of Millions
ASIC do NOTHING
Criminal dodgy Dixons Directors
Criminal ASIC
not to mention built a golf course in NE Vic
Really? Anyone from ASIC/Treasury etc play there?
Green fees for no service?