The regulator commenced the civil penalty proceedings in the Federal Court on Friday, alleging breaches of certain best interests obligations of the Corporations Act between 2 September 2015 and 31 May 2019.
ASIC has claimed that Dixon Advisory representatives knew or ought to have known that there was a conflict between their clients’ interests and the interests of entities associated within the Evans Dixon group. ASIC reported they had failed to give priority to the clients’ interests and provided advice that was inappropriate for clients’ circumstances.
The action relates to advice given to eight sample clients, who were advised to invest in the ASX-listed US Masters Residential Property Fund (URF) and URF-related products between 2 September 2015 and 31 May 2019.
The URF was established by Dixon Advisory in 2011 to give investors exposure to the US residential property market, by investing in residential property in the New York metropolitan area. ASIC reported it paid substantial fees to several companies owned by Evans Dixon, including Dixon Advisory.
ASIC has also alleged that a total of 51 separate instances of financial advice were provided to the eight sample clients in the relevant period, each of which resulted in two or more contraventions of ‘best interests duties’ under the Corporations Act – in total, 126 contraventions.
The corporate watchdog is seeking declarations of contraventions and pecuniary penalties against Dixon Advisory.
The maximum civil penalty for contraventions alleged against Dixon Advisory is $1 million per contravention for contraventions prior to 13 March 2019, and $10.5 million per contravention after that date.
ASIC is also seeking orders that Dixon Advisory:
a. put in place appropriate systems, policies and procedures to ensure that Dixon Advisory representatives comply with best interests’ obligations; and
b. provide a written report from an independent expert confirming this compliance.
Evans Dixon has indicated Dixon Advisory will be defending against the proceedings, stating “in due course [it] will file a comprehensive defence after it has received and had a reasonable opportunity to review ASIC’s detailed statement of claim”.
The group on Friday morning stated it expects to receive the final form of the concise statement, followed by a more detailed statement of claim in the coming weeks.
Well, it’s about time! 2 prospective clients came to see me (independently…about 3 months apart), both with Dixons & both had certain misgivings about how their superannuation arrangements were being managed by Dixons. Both had come out of industry funds because Dixons strongly advised them to commence SMSFs (before any SoA was provided to them). Then the investment recommendations came…no surprises that each was recommended (should I say funnelled) into Dixon investment products. Both portfolios were full of ’em. I asked (and received) the relevant Dixon SoAs and any other prior information each may have received from Dixons before they were presented with SoAs from each prospect. Each was a thing of beauty if you don’t care a jot about looking after clients’ well being, let alone compliance.
Let’s see:
– No FSGs were provided;
– No fact finds were obtained;
– No needs analysis undertaken;
– No risk profiling completed;
– No switching advice provided.
Just to name a few.
I suggested to each client that they complain to ASIC about this, particularly about the no switching advice. They didn’t want to. Understandable I guess…they probably didn’t want to appear foolish (which I believe is a silent issue & is a significant impediment prohibiting people from making a complaint).
So I obtained each client’s permission & sent it all to ASIC 4 years ago.
Let’s hope ASIC jump hard on these guys because it’s well deserved.
“What happened to the clients?”, I hear you ask. Well, each tried to get out, but penalties, charges and unrealised losses were high, so they limped along with Dixons for a while. They were so scarred by it all that they eventually decided to cut their losses & run back to their previous respective industry funds.
Shame on you both, Max & Darryl, for letting this happen.
ASIC is corrupt. Why’s this any diff to industry super?????
How is an investment by one super fund, to buy another super funds advice business, and then subsequently writing down those investment instruments in the best interest of members? In the best interest of the entity perhaps… but would it be in the sole best interest of members and be able to stand on it’s own merit? Seems like ASIC have double standards on this occasion.
ISF’s to big to fail & too big to litigate against…regulator would need legislative change to win an action against this financial behemoth on the grounds of conflicted remuneration, BID contravention etc…there has to be political will to enforce compliance (let alone transparency re their unlisted assets) on these institutions
all MDA’s and SMA’s are conflicted.
Everything is conflicted clown. Or are you working for free and eat air and drink sunshine?
That’s harsh with the name calling. Obviously some are more conflicted than others it seems and I can guarantee you many many advisers are very much unconflicted. Seems some advisers just woke up and realized that the brainwashing licensee he was working under, whilst ripping off clients, was actually a cult and that, that type of behavior was not the norm in the wider advice industry….it seems the term “no longer meets community expectations” is finally hitting home for some. Don’t fight it, change. With Banks leaving it feels like we need re-education camps.
To be fair, I did think this was conflicted years ago when clients used to stick this stuff under my nose. Having said that, I have no idea how Industry Funds continue to get away with the stuff that goes on.
I copped the same with Dixons when they changed Margin Lending provider from BT to Lift Capital which was done simply because Lift Capital paid Dixons a bigger margin – Lift Capital went in to receivership and i was left to fight the receivers for 3 years trying to get my money back – Dixon’s basically walked away and left me to fight my own fight!
Can anyone please explain to me the difference between this and an inudstry/union fund recommending an IFM investment, especially one where there is zero transparency and the ‘unlisted’ asset valuations are dubious at best? Anyone?
I would imagine the scale of that conflicted interests and non-best interests would be magnified 1000 times versus this Dixon group.
As others on here have stated multiple times, ASIC appears to be utterly corrupt
The difference is disclosure.
As in Dixon’s provided some inadequate disclosure whereas Industry Super Funds dont provide any…???
Yes.
Dixon’s products only serve one purpose…..get fees from clients with little to no thought about their performance.
The sad thing for clients that have already bought these products is for their unlisted products they can’t get out of them….meanwhile, Dixons keep taking their fees.
ASIC dismantling the financial services industry one by one using the advisers money for fines and fees.
They’ll soon do themselves out of a job when all advisers have been shut down!
LOL but no such conflict exists within ISF doing this 100% of the time and insto owned licences about 70% ??
If this is a difference of professional opinion, ASIC has no right prosecuting on ‘past performance’.
This is where FSU gets to demonstrate their worth to the Financial Advice community if indeed Dixon has not done the wrong thing and simply made a professional judgment call about the US property market.
Agreed. Not sure why people are voting you down unless they just don’t like Dixon instead of looking at the bigger picture?