Shine Lawyers, representing the class action, said a conditional settlement has been reached between E&P Financial Group and the estimated 4,000 customers allegedly affected by the adviser’s conduct.
The settlement was reached without admission of liability and is now subject to court approval.
The class action alleged E&P advisers, working under the Dixon Advisory Superannuation Service (DASS) – which went into liquidation in January last year – gave unsuitable advice that did not reflect their clients’ needs or their financial circumstances.
It was also alleged the advice was not in the clients’ best interests and, when there was a conflict, it was not adequately addressed.
In addition to E&P Financial and DASS, the proceedings were brought against former chief executive Alan Dixon and former director Christopher Brown.
The affected clients will retain the ability to make a claim with the Australian Financial Complaints Authority or financial services compensation of last resort.
“We are pleased to have been able to reach a conclusion in this class action for group members subject to the court’s approval, and that group members will retain their rights to bring a claim against DASS, pursuant to the financial compensation scheme of last resort,” Shine Lawyers’ head of class actions, Vicky Antzoulatos, said.
Separate action filed by Piper Alderman which was stayed pending the resolution of Shine Lawyer’s proceedings, has been dismissed.
Last year, the Federal Court imposed a $7.2 million penalty on Dixon Advisory over its investment advice.
The court found that on 53 occasions between October 2015 and May 2019, Dixon Advisory was the responsible licensee of six representatives who did not act in the best interests of eight clients when they advised these clients to acquire, roll over or retain interests in the US Masters Residential Property Fund (URF) and URF-related products.
Representatives of Dixon Advisory were also found to have failed to conduct a “reasonable investigation” of the clients’ circumstances before providing advice.
The Australian Securities and Investments Commission (ASIC) still has an active lawsuit against a former director of Dixon Advisory, Paul Ryan, for alleged breaches of directors’ duties.
ASIC deputy chair Sarah Court said in August this year: “Directors have responsibilities under the law to act in the best interests of their company, and this includes considering the interests of creditors when the company is facing insolvency.
“The creditors included thousands of financial advice clients who had invested in the US Masters Residential Property Fund and financial products operated by entities related to Dixon Advisory. These creditors suffered significant losses.”
Dixon Advisory previously held an Australian Financial Services Licence and operated a financial advice business focused on providing financial advice, investment advice, portfolio management, and superannuation administration services to retail clients.
The company filed for voluntary administration in January last year, with E&P Financial Group directors saying at the time that it “determined that mounting and actual potential liabilities mean it is likely to become insolvent at some future time”.
$4,000 per claimant (before Shine take their fees) seems woefully small given alot of them (judging by the ones i have seen) have lost 20 or 50* this amount.