The Australian Financial Complaints Authority (AFCA) has told the Senate estimates that alleged losses from Dixon Advisory clients are an estimated $458 million.
The total number of complaints received regarding the matter is 2,510, up from 1,948 in mid-February. The organisation said it had seen a particularly high volume received in the two weeks leading to 8 April, which was the date that ASIC had ordered Dixon to remain a member of AFCA.
AFCA has since announced it is looking to expel Dixon from AFCA membership now that date has passed.
Speaking at the Senate Economics Committee, AFCA chief operating officer, Justin Untersteiner, was asked by Senator Andrew Bragg how much losses totalled.
“If we look at open complaints – purely those claims that have been lodged by consumers and are yet to be vetted by AFCA, some may be lower than this, there is also a cap of $150,000 that hasn’t been taken into account – we have complaints that were lodged at the introduction of the legislation of $312 million. Further claims beyond that date total $146 million.
“In the closed category, we have awarded $5.7 million in losses.”
“Typically complaints relate to the advice, conflicts of interest and the appropriateness of the advice. But we have only assessed a small number out of many.”
AFCA chief executive, David Locke, said only 47 matters have been determined so far, which he described as a “drop in the ocean” given the high volume of total complaints received.
Of those cases that had been determined, Dr Jean Smith, deputy chief ombudsman, shared which matters the organisation has observed occurring most regularly.
“The primary allegation relate to best interest duty and the duties of advisers in the provision of advice to the clients of Dixon. They all relate to advice to invest in either of the two managed investment schemes, whether the advice was appropriate, whether there was adequate disclosure of conflicts of interest in relation to the ownership of the company and if that would have had a bearing on how clients made a decision to invest in those schemes or not.
“We are only looking at whether there has been an issue with the advice relationship and whether or not the adviser in those circumstances, together with the financial firm, have met all of their obligations.”
So AFCA had a view on advisers actions – perhaps ASIC needed to talk with AFCA before deciding not to also pursue individe=ual advisers as well as the licensee.
It simply can’t be viewed as fair, reasonable or equitable for the industry advice participants to have to fund the short comings of ASIC’s monitoring and supervision program resulting in the Dixon failure. Surely a better solution would be for the multitude of ASIC penalties to be used in perpetuity to fund these failed cases to help clients impacted.
47 claims settled from 2,510 cases! It continues to amaze me how governments create these schemes with a stroke of a pen but dont spend any time or energy on how to deliver the scheme! It creates a joke of the whole thing.
I think the government knew exactly how to design the implementation… This way, they get to fund a minor portion and cripple the adviser community with the remainder. 🙁