In its half-year results released this week, EP1 addressed its subsidiary, Dixon Advisory and Superannuation Services (DASS), which filed for voluntary administration in January.
EP1 confirmed that it is facilitating the “prompt transfer” of DASS clients to a replacement service provider of the client’s choice. As of Tuesday, 22 February, 70 per cent of DASS clients opted to transfer to brokerage firm Evans & Partners, 16 per cent have asked to be transferred to an external provider and 14 per cent are yet to state their preference.
Announcing the move to appoint voluntary administrators in January, EP1 directors “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 DASS by the Australian Financial Complaints Authority (AFCA) and penalties by ASIC.
In October, DASS was also sued by a couple for poor retirement advice that left them $900,000 worse off.
PwC partners, Stephen Longley and Craig Crosbie, were appointed as voluntary administrators.
In its results released this week, EP1 said: “In coming months the group intends to propose a deed of company arrangement (DOCA) to the voluntary administrators as part of a wider arrangement that will provide for, among other matters, a comprehensive settlement of the Piper Alderman and Shine Lawyers representative proceedings and all other claims.
“The group intends to contribute a sum equivalent to the $8.2 million in penalties and costs agreed by DASS in the ASIC proceeding for the benefit of creditors as part of a comprehensive settlement of all DASS and related claims.”
The crazy thing is, that most of these clients will still be stuck in the same underperforming investments and unable to get out of them – but still paying E&P for the privilege of looking after them.
Cmon ASIC, sort out the real problem which is advisers selling products owned by their employer. It is conflicted and is the root cause of most issues we see.
#banverticalintegration