In a statement on Thursday, the Financial Advice Association Australia (FAAA) announced it has written to all federal MPs seeking support for a public inquiry into not just the collapse of Dixon Advisory, but also the effect it has had on the Compensation Scheme of Last Resort (CSLR).
The FAAA stepped up its calls for a public inquiry in July, releasing a paper detailing the action that the Australian Securities and Investments Commission (ASIC) has taken against Dixon as well as the class action, which was settled in April; however, because both actions did not play out in the courts, there have not been answers to advisers’ questions.
As much as $135 million of this compensation bill could be charged to the financial advice profession through the CSLR as a result of the Dixon debacle, which the FAAA added could potentially cost all financial advisers more than $8,000 each and drive up the already high cost of financial advice.
FAAA chief executive Sarah Abood said the association has commenced working with Treasury on the back of a meeting with Financial Services Minister Stephen Jones in August, with the goal to fix some of the issues with the scheme.
“However, 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.”
Phil Anderson, FAAA general manager of policy, advocacy and standards, added that there are “too many unanswered questions”.
“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,” Anderson said.
Abood added that with so much of the advice profession comprised of small business owners, the sector “simply can’t afford to underwrite the malpractice of large, listed companies, and nor should we”.
“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. 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,” she said.
“We owe it to consumers to ensure that the CSLR is fairly and sustainably funded. A public inquiry into what happened at Dixon Advisory is critical, so we can learn the lessons of this failure and ensure it can never happen again.”
After reading this all I can say is thankfully we’ve got the AIOFP going into bat for advisers.
Why? they’ve achieved nothing.
The only way this government is going to understand the damage done will be at the Ballot Box and then it will be too late to fix it.
Dixons happened because Government refused to act and now, they must bear the cost.
Luckily the current government acted by limiting their exposure to the CSLR to the first 3 months instead of 12 months, which meant they sidestepped being liable for the Dixons fiasco. They did this deliberately, whilst also be cognisant that the bill will be passed to financial advisers, and totally ignoring their remit about the high costs to provide financial advice.
Dodgy Dixon’s Illegally Phoenixes into E&P must pay.
ASIC must pay for its utter useless incompetence.
Treasury must pay for its corrupt manipulations to get its own staff bailed out.
ALL ADVISERS MUST REFUSE TO PAY.
Let’s see Govt & ASIC try to shut down every Adviser.
Technically the question is what constitutes a phoenix and what does not?
Legal opinion may vary in relation to Dixon predicated on who legal counsel is representing…
Happy that FAAA are spending my membership fees on a campaign like this… Don’t let it go in fact garner public support by media ads to really ramp up the pressure on the government to act with an inquiry!
Won’t happen because Labor doesn’t want it to happen and the Teals will support Labor.
BTW – if you think QAR 2.0 will occur before the next election or any reasonable amount of time after that – forget it.