AFCA set to expel United Global Capital

The Australian Financial Complaints Authority (AFCA) has confirmed United Global Capital’s (UGC) membership will not be extended to accept further complaints, avoiding a repeat of the Dixon Advisory scenario.

In its April meeting, the AFCA board resolved to expel UGC as a member as of 5pm AEST on 31 May 2025.

“From that time, AFCA will not be able to accept any new complaints about UGC. This is because AFCA can only accept complaints about firms that are current members of the AFCA scheme,” it said in an update.

“The expulsion of UGC will not prevent AFCA from considering and finalising complaints received before that time.”

Importantly, any complaints against the collapsed firm need to be completed and “formally submitted” by the deadline, not just in progress, with AFCA noting it will not accept complaints that have been partly completed or received after the deadline.

In June 2024, ASIC obtained interim asset-freezing orders against UGC and related property development investment company Global Capital Property Fund Limited (GCPF) in the Federal Court.

On 31 July, ASIC announced that it had cancelled UGC’s Australian Financial Services Licence (AFSL), as well as banning director Joel Hewish for 10 years. In cancelling UGC’s licence, ASIC required it to remain a member of the AFCA scheme until at least 31 May 2025.

AFCA has moved much faster in expelling UGC’s membership than had been the case for Dixon Advisory, which stayed a member of the scheme for more than two years after the firm collapsed, leading to a far greater number of complaints being lodged that will eventually make it to the Compensation Scheme of Last Resort (CSLR).

ASIC had eventually required Dixon maintain its membership until at least 8 April 2024, however AFCA did not move to expel the firm until late May with a final exit date of 30 June.

In its submission to the Senate economics references committee into wealth management companies, the Financial Advice Association Australia (FAAA) argued questions needed to be asked as to why Dixon Advisory was allowed to remain a member for so long.

It suggested the committee explore “the manner in which the Dixon Advisory membership of AFCA was extended excessively leading to a substantial jump in cases that will be paid for by industry”.

“The cancellation of the licence should not be unreasonably extended. The two years and five months that was allowed for Dixon Advisory clients to complain was excessive,” the FAAA said.

“There needs to be a standard approach and clients need to understand that there is a limited window. We suggest specific questions should be asked of ASIC and AFCA to understand the timeline and the reasons for the decisions made in relation to Dixon Advisory’s AFCA membership.”

The speedy response from AFCA will be a welcome one for financial advisers, given it will avoid any unnecessary blowout in the number of complaints that can result in a determination being paid through the CSLR.

Speaking with Money Management’s sister title ifa in February, CSLR chief executive David Berry explained that AFCA ending UGC’s membership factored into independent actuarial firm Finity’s assumptions when projecting the levy for the 2025–26 financial year.

At the time of the report being compiled, there had been 101 complaints lodged with AFCA against UGC, however, that number had grown to 141 by the time the report and estimated levy were announced.

“It all depends on when AFCA will cease their membership so people can’t lodge any complaints,” Berry said.

The CSLR has estimated that the total number of complaints will be 346, with 307 of those being paid in FY25–26.

“Now we don’t know what that actual number will be. It’s what the actuaries, using their experience with other modelling they’ve done, with other circumstances and with Dixon, that’s the number they’ve come up with. I think it’s unlikely we’re going to see a huge increase,” he said.

Berry added that while the CSLR doesn’t know what AFCA is planning to do in terms of how long it will keep UGC’s membership open, he thinks “they learnt a lot from the Dixon [situation] and they’ll move a lot faster this time around”.

UGC forms the bulk of the FY25–26 levy at $44.57 million, compared with $12.25 million for Dixon.