Financial Advice Association Australia (FAAA) chief executive officer, Sarah Abood, has called on Financial Services Minister Stephen Jones to take action on the drastically escalating costs of the Compensation Scheme of Last Resort (CSLR).
According to the FAAA, an update from the Australian Financial Complaints Authority (AFCA) earlier this week that noted a further 544 complaints about Dixon Advisory have been made since 15 February 2024, means the financial advice profession will have to pay an estimated additional cost of approximately $65 million.
This equates to a direct cost to every financial adviser of $4,165 on top of what has already been disclosed by the CSLR, which the FAAA said is a “huge impost for the financial advice profession that is already dealing with declining numbers and spiralling costs”.
“The Dixon Advisory AFCA membership has already been extended twice and the entity was put into administration over two years ago now. We urgently call upon the AFCA board to clarify the process and timing for that membership to end,” Abood said.
“We also urgently, again, call upon the government to review the funding model of the CSLR. Not only is it completely unfair, but it is also economically impossible for the small business financial advice sector to underwrite the failures of large listed firms.
“Why should financial advisers pay for the failure of Dixon Advisory, a subsidiary of the large listed group Evans and Partners, which earned over $174 million in revenue last financial year?”
She added that the matter represents an “existential threat to our profession”.
“The minister has not yet responded to our many requests for engagement on this matter, and we call upon him again to work with us urgently to find a sustainable solution to this crisis,” Abood said.
This is the latest in a string of strong FAAA statements on the CSLR, including chair David Sharpe saying the scheme could “devastate our profession” at a roadshow in Sydney last week.
“We’re advocating for it to not be retrospective. We’re advocating for a large corporate not to simply be able to walk away from a subsidiary, so individual advisers like you and I are footing the bill,” Sharpe said.
“It can’t be the compensation scheme of first resort, purely because it’s too hard to chase the money. I’m sick of being an ATM – an adviser teller machine – and every time there’s a bill, we’re the ones who have to fork it out.”
What’s to stop other retrospective claims from other failed products? Is this whole thing even legal?
The FAAA might be calling, but nobody is listening…..!!!
The softly softly diplomatic approach has not worked in the past and is still not working, not only with this but many other things! It’s time to start calling out the wrongs in the mainstream media, even if it means taking out full page ads! The mortgage brokers did it successfully by going public, yet our professional associations keep going down the path of pandering to those in the sheltered workshop behind closed doors!
When discussing the fee increases we have implemented across our practice over the past 12 months, I have no issues explaining to my clients that a large reason the fees have had to go up is due to the various Government imposed levies and fees we now have to pay as advisers.
Advisers are basically stupid for accepting this nonsense. Not a peep out of the large licensees. Why is that?
I definitely won’t be renewing my FAAA membership fees…I’ll be putting it towards this levy. $1,000 saved, tens of thousands wasted over two decades. I thought the new Association would get a wake up call and start putting Advisers needs first, but the only thing I see is the continuation of them putting their hip pockets first. Woke statements of “we’re disappointed” no longer cut it.
Perhaps I’ll return a member one day, but as a Qualified Adviser, working in the Call Centre from home 2 days a week, when Hesta pays for my membership. I believe that’s the ideal member FAAA is going for.
The implication here is that the government views all advisers as complicit in the wrong doing of all other advisers. This has been the case since the Royal Commission and there has been little resistance by any of the bodies representing us. I cannot begin to understand how the first additional fee that was applied to us was legal, let alone this proposed fee. Why are we paying for this?
Well, the FAAA has done what their two predecessors did [FPA/AFA supporting FASEA/LIF], supported the CSLR then worked out it was flawed and now trying to vocally grandstand to ‘protect Advisers’……it’s all a bit late Phil and Sarah….you have done it again.
Seems an accurate description of how they work – and I am sure they believe they are doing a great job?
My PI Cover for 1 single adviser was $12,000 last year, my wife renewed her PI cover as a Psychologist for $650 and we wonder why the minimum fee to see an adviser is $4000 only going to go higher after this impost.
Why is it so difficult to strip the assets of the directors past and present of Dixon? After that an appropriate custodial sentence and guess what, the problem is unlikely to be repeated.
Possibly now reaching the point where as a professional every firm and adviser – needs to take direct action as a group – commonly known as a strike – where we cease paying all government levies and taxes, which we believe are being illegally applied. There is historical precedent – “Boston Tea Party” against wanton taxes using taxes to fund war against France, the Eureka stockade based on miners tax. All of these actions bought about change.
This Government would be aware of this given the paymasters of this Government the CFMEU and AWU have a track record of doing this and getting their way. Fight as lions or die like sheep. Diplomacy and negotiation is not working because they are no longer listening.
How do we get this organised? If all Advisers agree then any government wouldn’t be stupid enough to ban all 16K advisers surely??
Omg this is another level of absolute insult. In what other industry or profession do the existing professionals or serve providers pay for the misdemeanors of their peers. Do doctor’s, lawyers, accountants politicians pay these same levies
Disgusting abuse of power
Fighting an uphill battle.
30 years of direct personal insurance-only advice without blemish. Now required to pitch in to compensate alleged “victims” of Ponzi scheme operators.
Far to Far ENOUGH.
100% OF REAL ADVISERS ON MASS NEED TO REFUSE TO PAY BOTH ASIC AND CSLR LEVIES.
Let’s see Govt, Pollies, ASIC, etc try to Ban the WHOLE ADVICE PROFESSION.
Nothing else will work with Corrupt Canberra and Useless ASIC.
They would love to ban the whole advice profession. They are annihilating us on purpose.
No doubt it will be crickets from Jones’s end once more. Meanwhile, he’ll happily participate in a couple of photo ops for lightweight issues loosely related to his portfolio.
This is unbelievable.
Every self-employed adviser needs to front up to the office of their local fed member and show that this is an unfair impost and entirely unreasonable.
Would QANTAS and Virgin ever be required to pay for the failings of another airline? Definitely not!
As a Canberra based adviser, I know too well that the clients of Dixons are mostly now sitting with E&P advisers. This needs to be addressed.
The FAAA should never have supported any aspect of the CSLR. I understand the FAAA thought they were doing the right thing, but I find it quite remarkable how naive they are. How could they have ever put their name to it. Really poor.
…well, it’s the thought that counts, even if the horse bolted a while back.
So, effectively the Govt is running a protection racket for Dixon’s by forcing compliant Advisers to pay the costs in order to protect Dixon’s……an organisation that knowingly structured product, advised, promoted and issued conflicted advice leaving their clients significantly worse off and the innocent are left to pick up the costs for the guilty party.
In any other world other than the disgraceful state of Financial Services and Advice could this be even considered on any level whatsoever.
This is outright Govt sanctioned discrimination against a particular group.
Makes you wonder that of the affected clients, whether any had links to politicians or ASIC. Which other failed products have had their investors remunerated like this.
Adovacy is dead across all professions