The Federal Court has imposed a $7.2 million penalty on Dixon Advisory and Superannuation Services Pty Limited (Dixon Advisory).
On Monday (19 September), ASIC confirmed the penalty after six representatives failed to act in their clients’ best interests and failed to provide advice appropriate to their clients’ circumstances.
The Court found that on 53 occasions between October 2015 and May 2019, Dixon Advisory — now in voluntary administration — 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.
“There is no evidence that the (Dixon Advisory) representatives conducted the necessary reasonable investigations into the recommended financial products or any alternative financial products, nor is there evidence that they considered the personal circumstances of the clients,” Justice Timothy McEvoy said.
“The contraventions were not the result of isolated or unauthorised conduct of the representatives. Six representatives committed the contraventions over a period spanning some three and a half years.”
ASIC deputy chair Sarah Court added: “Licensees need to ensure their representatives are taking into account their clients’ specific needs and circumstances.
“Advice that fails to reflect client circumstances — or advice models that lead to one-size-fits-all outcomes — are less likely to meet best interest duty obligations and can expose clients to a risk of capital loss.”
As well as the $7.2 million penalty, Dixon Advisory was also ordered to pay ASIC’s legal costs of $800,000.
Dixon Advisory filed for voluntary administration in January 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”.
The actual or potential liabilities relate to possible damages from proceedings that include a class action lodged by Piper Alderman last November which alleged that “Dixon Advisory failed to act in the best interests of clients after its investment committee reviewed, approved and recommended which products were to be pushed on to group members” whom Dixon Advisory stood to earn millions in fees from.
The liabilities also relate to claims against Dixon Advisory by the Australian Financial Complaints Authority (AFCA) and penalties by ASIC.
Is this a glimpse into the future?
If Michelle Levy gets her way, companies like Dixons (OK, the ones that haven’t declared insolvency) will be able to sell clients these products and not have to meet any best interest duty.
They can ask them 10 questions, claim it was all done through Digital Advice and claim it was still good advice.
BAck to the future we go.
So Dixon commit 53 occasions of not acting in their client’s best interest and are fined $7.2m. On the other hand, the collective banks and AMP did the same thing on an industrial scale and ASIC could not land a blow in the form of a single director being charged or a fine that would be taken seriously in any boardroom.
It would be nice to be protected by ASIC!
and it gets worse. Michelle Levy is proposing that these companies be able to sell directly to consumers with minimal consumer protections…
I look forward to compensating all their clients…. What a system hey!
Nothing lasts forever. Everyone gets found out in the end.
Coming up Next week Adviser pays $100,000 fine for giving out FDS at client meeting on Monday when it was due on Tuesday.
Could they have used the Accountants that AwareSuper used when they purchased StateSuper, issued private credit to buy it, and then wrote it all off due to fee for no service? Seems like ASIC only goes after Terry Dover, small advisers and anyone not making political donations.
It’s all political… you know it.
Anyone and anything in competition to Industry Super – see the pattern?
So ASIC’s legal costs have been paid in the settlement. Does this mean all advisers who have paid their ASIC levy gets a refund? I bet not, what a scam.
Definitely not saying they shouldn’t have been slapped with something, though it’s an interesting comment: “…there’s no evidence…”. Financial Services must be the only field in this country full of red tape where you can be convicted and sentenced when there’s no evidence present, rather than evidence.
or more accurately, no evidence required, just an accusation based on hearsay and broad speculation will do it.
You should have a re read of the article. The ‘There is no evidence’ relates to – There is no evidence that the 6 Dixon staff in any way DID THEIR REQUIRED JOB CORRECTLY
Best get in line then eh, they’ll be searching for their pound of flesh after the creditors, administration, bankruptcy and class action cases go through .. I look forward to paying for these typed events through the new Compensation of Last Resort schemes .. utter nonsense.
They’ll be more of this in the future once Michelle Levy’s QAR is implemented- oh wait, no it won’t because advisers are bound by a code of ethics
Its probably an editing error, but I find it interesting that the finding of failing to meet the “best interest duty” has become retrospective. Yes, and QAR is before looking at the Code of Ethics. What a joke.
If only they had been AMP or the big banks they would have gotten away with it