In a letter to Financial Services Minister Stephen Jones, seen by ifa, Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston said the AIOFP has referred its concerns around the role “Treasury bureaucrats” have played in the construction of the Compensation Scheme of Last Resort (CSLR) to the National Anti-Corruption Commission (NACC) for investigation.
“Further to our correspondence with your office on June 30th we have some additional information that raises further questions and confusion about the relationship between the CSLR, the Dixon Advisory failure and the Treasury bureaucrats who we assume structured the legislation and its outcomes,” Johnston said in the letter.
“This issue has enraged and galvanised the advice community like no other in living memory, it will substantially increase the cost of advice for consumers when the government’s objective should be to lower costs.”
Among the association’s concerns, Johnston said, is why the Dixon Advisory collapse received “exclusive access to the CSLR compensation process”, arguing that there were 191 other potential failure participants since 2006 representing over 100,000 consumers.
He added that the AIOFP also raised its issues with Australian Financial Complaints Authority (AFCA) chief executive David Locke.
“Considering the legislation states that AFCA must approve ALL CSLR participants, and the legislation should only commence after royal assent has been granted (therefore we assume no retrospectivity is permitted), Mr Locke stated he has no knowledge of the circumstances and directs us to deal ‘with government’, which is rather interesting to say the least,” Johnston said.
“We are not suggesting Mr Locke is involved with the controversy, but we find it very peculiar that AFCA knows nothing about this specific issue when they figure prominently in the legislation with approving which incidents CSLR can compensate.”
ifa has reached out to David Locke for comment.
Johnston also outlined a series of questions for the minister, specifically looking for an explanation of this “anomaly”.
“Can you also please confirm that the Dixon failure is the only product/advice incident CSLR is allowing to be retrospectively treated? If true, can you please explain why Dixon has received this special CSLR treatment,” he wrote.
“Can you please provide some clarity around the decision-making process and which bureaucrats were involved in the CSLR/Dixon decision? We will be seeking relevant information from FOI to assist our understanding of the issue.
“Until we get a response from your office, we can only assume the circumstantial evidence is credible. Please note, we do not believe your office is in any way complicit with this issue.”
The AIOFP’s preference for resolution, Johnston said, is that the “Dixon element is immediately eliminated”, however, he has called on the minister to suspend the CSLR levy in the short term.
“To be fair to the advice community and particularly consumers (who will ultimately pay for the levy via higher advice costs), we are requesting ministerial intervention powers are exercised to suspend the CSLR adviser levy invoicing process by ASIC until at least the NACC has investigated the circumstances,” Johnston said.
“If the NACC findings confirm irregularities have taken place, we will be requesting the Dixon compensation levy is immediately eliminated and the product manufacturer contributions remain within CSLR to compensate future eligible victims.”
In an earlier letter to Minister Jones, the AIOFP signalled it would look to take the matter to “other market options for assessment” if the response was not satisfactory.
“The AIOFP, its members and we believe the wider Advice community are greatly perturbed by the suspicious circumstances surrounding the DIXON/CSLR/CANBERRA BUREAUCRAT nexus and the preferential CSLR compensation treatment of Dixon victims when all other consumer victims of alternative product/advice failures are precluded,” Johnston said last month.
“We think there is a distinct ‘stench’ of either corruption, manipulation and/or profound conflicts of interest within the construction/operations of CSLR which was directed and managed by Treasury bureaucrats and/or their associates.”
where is the next Dixon Advisory?
Declaring you have a conflict of interest and engineering a self – interested outcome are two very different issues….this has stunk from the beginning…..
NCCC really??? And I thought America was the land of conspiracy theory nuts.
Biden is fine right?
Thanks Industry Super troll p
Dear Non – members, if you would like a copy of our submission send a request to pjohnston@aiofp.net.au and I will forward it to you. Regards Peter Johnston – AIOFP.
Great job, thanks for standing up for Real Advisers AIOFP & Peter Johnston
A lot of noise, but late to the party again. The work has already been done on this issue and these questions have already been asked.
Transcript from Senate Estimates – 4 June 2024
Senator BRAGG: Just quickly, my last area of inquiry is in relation to this CSLR issue. How
many former Treasury officials do you think were investors with Dixon Advisory?
Ms N Luu: I understand there were three previous Treasury officers that did declare a conflict of interest, but
I’ll just check with Ms Hoang.
Ms Hoang: That’s right. On record, we know that three staff members in the department have declared a
possible conflict of interest in relation to Dixon Advisory. One Treasury staff member has indicated that the
possible conflict of interest ended in November 2019. The other two staff members did not work on any matters
relating to the CSLR. None of the declarations represent current conflicts with respect to the staff members’ role with Treasury
And how many didn’t declare? Has Ms N Luu replied? Question on notice is it? Seems to be a lot of that – who would have thought these people retain such little knowledge?
“I understand there were three previous Treasury officers…..”
You will notice she states she “understands” – she DOES NOT state she knows.
Clearly her answer is designed so that a bus can be driven straight through it and not her problem?
That seems to be the Public Service standard – clear as mud?
Bit touchy is it?
Triggered?
Do you really think Treasury bureaucrats who have a long track record of imposing their own narrow ideological biases, rather than acting professionally and impartially, are going to willingly declare their conflict of interest? Do you really think Treasury or ASIC are going to provide full and honest answers to a Senate committee, when they have shown time and again they hold elected parliamentarians (and the voters they represent) in complete contempt? Treasury and ASIC need to be far more rigorously investigated by a body with greater power and resources than a Senate committee.
Not a lot of clarity from Treasury is there – just that she “understands” – covering the fact that she does not know?
Perhaps where there is smoke?
Could not agree more. The reference to ‘ we will be pursuing FOI’ (to that effect) should only be followed with ‘because we should have done it sooner’.
To write a letter which frankly reads worse than a first year law undergrad could write – it’s tenor, framing and language is meh – makes you really wonder.
So if there is no problem to fully disclose EVERYTHING then bring it on let’s see every email, every phone call every meeting every discussion of the corrupt stench and then we can all decide the truth
Peter Johnston is such a relief.
Kudos to Peter Johnston for taking a bold stand on the Dixon Advisory CSLR debacle. His referral of this issue to the National Anti-Corruption Commission is a significant step toward exposing the potential corruption and backroom deals that have likely tainted the process. Johnston’s commitment to justice for advisers, despite representing only a minority of them, is commendable.
It’s not the first time either, as he and the AIOFP fought the good fight during the grand left of grandfathered trail commissions.
It is entirely legitimate to consider suspect the highly suspicious circumstances surrounding the Dixon Advisory failure and question the special treatment it and its civil service clients received.
Joined AIOFP last year but kept my FAAA membership just to assess which is more valuable to me. Have not renewed FAAA this year. Peter is the only person that has our backs covered.
Thank you Peter for your amazing work where others fail us as advisors
Finally, a pro-active association. Well done, Mr Johnston.
I need to keep my FAAA membership for my CFP status (which I think is wrong), but I’ll be joining the AIOFP as well and already consiuder them the only industry body who actually cares for and standds up for my interests. As an employee of a large corporate I used to this this guy was a lot of hot air, but as I have matured and become self-employed, I have realised he’s actually the only one doing what he is paid to do. Where are the FAAA?
Doing the same.
Great to see other Real Advisers joining AIOFP.
As a 20 year self AFSL small group and 20 year AIOFP member, the AIOFP have not been perfect but the simple fact is they are the only Adviser representative that actually represents Advisers.
The rest of the so called advisor representatives don’t represent Real Advisers they represent product interest and other conflicted interests.
I have no understanding now that the CFP means not much and other regulatory changes and non bank changes etc why anyone supports others besides the AIOFP
Be honest Sarah why don’t you just come out and say the first tranche of the DFBO bill will do almost nothing to reduce the cost of advice and the FAAA is extremely disappointed that the government did not implement many of the actions that have been requested? How about using our membership fees to put full page ads in every paper in Australia to inform clients and the public as to why they are paying more? Time for more action and less talk…
Crickets from FAAA.
Meanwhile back @ FAAA headquarters the sounds of crickets can be heard…
Peter Johnston for PM please.
Good to see, diplomacy has not worked. We are being walked over.
I understand that many within the industry consider Peter to be “that fruit cake from Adelaide”, and the AIOFP having not many actual fee paying members (not just names on a mailing list) & therefore not being representative of the broader advice community, however, I must applaud Peter and the AIOFP in pursuing this matter. As the saying goes, where there’s smoke…
I’m hopeful the questions asked will receive fulsome responses, however, I suspect that whirring noise I can hear in the background would be the shredders working overtime in the Canberra bureaucrat offices as they attempt to derail any inquiry should the NACC decide to investigate.
Such is the way of the world!
Never mind the FAAA – I’m very happy with CFP course. It’s tough, but worth it (I think?)
Say what you want about Peter but he seems to be the only one with any balls to stand up for us and what is right!
Absolutely agree !!!!
Well done to Peter Johnstone – he should be the sole spokesman for the Australian advice community. Because of his good work I intend to become an AIOFP member even though I don’t need any particular service.
Myself and 2 other planners under our licence recently joined AIOFP and let our June 30 FAAA membership lapse.
I am considering the same thing
Same
Well done Peter. Finally, some action by a representative industry body!