On Tuesday, ifa reported that the economics references committee will scrutinise the collapse of Dixon Advisory and its impact on the Compensation Scheme of Last Resort (CSLR) after a motion moved in the Senate by Senator Pauline Hanson secured cross-Parliament support.
Scheduled to take place and report by the last sitting day in March 2025, the inquiry will address several key issues including the underlying cause of Dixon’s collapse, the effect of the US Masters Residential Property Fund, the actions of key individuals and of the Australian Securities and Investments Commission (ASIC), the impact of the administration and insolvency issues, and the potential implications for future matters.
In a statement released on Tuesday afternoon, the Financial Advice Association Australia (FAAA) declared victory, having led the charge in calling for an inquiry into the CSLR.
“Today marks a major step forward for our profession, and we want to thank Senator Hanson for her support in seeking transparency and for backing Australia’s small financial advice businesses in proposing this inquiry today,” said the CEO of the FAAA, Sarah Abood.
“An inquiry is essential to understanding the full scope of what went wrong with Dixon Advisory – a scandal involving hundreds of millions in client losses – and to ensure it is not repeated.”
The FAAA has been raising its concerns over the handling of the Dixon Advisory case for months and the implications for the broader financial advice profession.
As part of its advocacy, the body met with Treasury last week, and with Minister Stephen Jones in August, while also addressing a letter to all parliamentarians last week asking for their support for a public inquiry.
“The FAAA has been a vocal advocate for reforms to the funding model of the CSLR and has repeatedly called for deeper investigation into Dixon Advisory to prevent similar collapses in the future,” Abood said.
“The financial advice profession is made up of thousands of small businesses right across the country, helping Australians achieve their financial goals. We do not have the financial capacity to underwrite the misconduct of large companies, and nor should we.
“This inquiry is a crucial step forward in understanding what went wrong at Dixon Advisory, and ensuring it can’t happen again.”
Sharing the FAAA’s win on LinkedIn, the body’s general manager of policy, advocacy and standards, Phil Anderson, emphasised the extensive efforts made to ensure a thorough investigation into the CSLR.
“There will be a lot more work to put our case forward, highlighting the issues with what Dixon Advisory did and the design and implementation of the CSLR, however, today is a great start,” Anderson said.
The inquiry has been unanimously welcomed by the wider profession.
Peter Johnston, the executive director of the Association of Independently Owned Financial Professionals, said: “Great news today around the CSLR/Dixon inquiry”.
Others took to social media to celebrate the win, with financial adviser Nathan Fradley writing on LinkedIn: “Massive news, well done Phil and the broader FAAA team”.
Similarly, Keith Cullen, managing director at WT Financial, said: “Great job on the relentless pressure Philip Anderson and Sarah Abood. Here’s to encouraging everyone to unite behind the cause”.
Great job FAAA. It is fantastic to see that our association can have a real impact in Canberra. I know that this is only the first step and we will now be waiting on the results of the review, however no doubt the FAAA will be continuing to run their arguments on the CSLR throughout the inquiry process. It is good to be heard for a change.
Well FAAA shouldn’t be crowing so soon.
Besides, we shouldn’t forget the pressure that the AOIFP has put on them. I think AOIFP’s referral to the Corruption commissions is far more effective and perhaps is what caused the Govt to relent a bit- which is all they have done.
I am truly shocked with the brazen way the CSLR was set up to favour DIXON clients/advisers and Canberra officials. It reflects poorly on the governance standards in Australia.
This is about principles.
Principles broken by Dixon’s and E&P and principles broken by a Govt that believed it is entirely acceptable that innocent, hard working, dedicated, professional Adviser’s should be heavily penalised for the wrongdoings of others who knew how to re-organise their business in order to avoid the penalties that should have been applied and should still be applied.
In a fight of what is right and what is wrong, this is one of the big ones.
Never underestimate a dedicated group of people who firmly believe they have been wronged based on principle and fairness.
Why does the cynic in me believe that the only thing that will come out of this will be more client consent forms that need to be signed, another public register we need to be listed on, more levies to pay and another “single disciplinary body” to make our lives more of a misery?
Where is the Compensation Scheme of Last Resort for failed builders and faulty workmanship by construction companies?
Where is the Compensation Scheme of Last Resort for failed unlisted investment trusts promotors which cost Australian consumers in excess of $42 Billion Dollars.
Why are financial planners so special that they need a Compensation Scheme of Last Resort, and no other sector comes even close to having one imposed upon them.
Why must our clients pay for someone’s mistakes when they have no control over preventing these losses.
This is the role for PI Insurance and that should have been the place where CSLR was imposed.
The PI Insurers should have made up the shortfall for any unpaid claims through AFCA.
To Stephen Jones
You currently have the power to fix this and if you don’t then our next Finance Minister will inherit that responsibility.
If you don’t fix it, then I strongly suggest that you start looking for a new job.
Not to discredit the work gone in to get this looked at – I am still disappointed that the government was ever able to get away with such unfair unconscionable legislation in the first place. To take from the honest hard-working advisers to compensate for the greedy dishonest ones is so wrong. Where money is involved, these people will try their utmost to rip people off. Now we also have the online scammers – they are no better and yet it would be only a matter of time that the honest planners would be paying for that as well. The above is just one issue – there are far too many issues wrong with the advice industry to list – and they are all as a result of government legislating in an industry they do not understand and are too arrogant to listen. I guess they are doing that in other industries too if I listen to the news! They don’t get much right.
Never forget the advice of Sir Humphrey Appleby: a government never holds an inquiry unless it knows in advance what the outcome will be.
In this case the Enquiry will find that: the CSLR levy is ‘correct’ and advisers should foot the (ever increasing) bill and keep their collective yaps shut.
How anyone on Government thinks its fair for those that do the ‘right thing’ in an industry to compensate losses for clients of those doing the ‘wrong thing’ is beyond belief. This wouldn’t happen in any other industry.
While this is a fantastic development in this sorry saga, let’s not go OTT with the back-slapping. How this impacts the impost on financial advisers to foot the bill, if at all, remains to be seen. Fingers crossed for a fair outcome.