The Australian Securities and Investments Commission (ASIC) cancelled the Australian Financial Services Licence (AFSL) of Dixon Advisory and Superannuation Solutions (DASS) on 5 April 2023, but the firm was required to maintain Australian Financial Complaints Authority (AFCA) membership until 8 April in order for consumers to lodge a complaint.
It also urged consumers to lodge a complaint in order to be eligible for the Compensation Scheme of Last Resort (CSLR), which came into force on 2 April.
As of 12 April, AFCA has confirmed DASS remains a current AFCA member and noted the ASIC requirement did not necessitate DASS to bring its membership to an end beyond 8 April.
“Termination of an AFCA membership could occur voluntarily, if a member is in liquidation or if a member has unpaid fees and charges. Termination of an AFCA membership would then be a decision for the AFCA board. However, none of the above prerequisites for membership cessation has been met yet,” AFCA said.
“AFCA must accept complaints against financial firms with current AFCA membership if those complaints fall within AFCA’s jurisdiction.”
As at 1 February 2024, AFCA has over 1,900 complaints registered for Dixon Advisory and the firm’s downfall is the primary reason that the levy for financial advisers is so high as the “surge costs” involved in processing DASS claims have been allocated in their entirety to the financial advice sector.
The second CSLR levy period estimate for financial advisers is $18.5 million out of a total $24.1 million levy, and CSLR said it could reach as high as $39.4 million if AFCA processes DASS complaints faster than expected.
Its report said: “An outcome of the second levy period exceeding $18.4 million, for example, could plausibly result from AFCA processing complaints faster than anticipated in our determination patterns. We have assumed that around 43 per cent of post-CSLR DASS complaints will have determinations issued by June 2025. However, if AFCA is able to determine all DASS complaints by March 2025, then the second levy period amount could end up around $39.4 million.”
A class action hearing against DASS to approve a $16 million settlement was pushed back earlier this month from 3 April to 17 April “to allow the application to provide further information to the court”.
The hearing relates to the class action that Shine Lawyers filed in December 2021 against DASS, E&P Financial Group, former Dixon chief executive Alan Dixon, and former director Christopher Brown.
In November 2023, the class action, which alleged DASS financial advisers gave unsuitable advice and failed to address conflicts of interest, was settled for $16 million. The settlement was reached without admission of liability and is subject to court approval.
Of course Dixon would remain a member, they know they won’t need to pay anything. Absolutely disgusting.