E&P updates on impact of DASS failure
Expenses incurred by responding to the failure of Dixon Advisory and Superannuation Services (DASS) has caused total revenue at E&P Financial Group to decline to $97 million.
Announcing its results for the first six months of the financial year to 31 December 2022, the firm said total revenue was $97 million. While this was an 13% increase on the previous half, it was 15% less than in the prior corresponding period.
DASS was penalised $7.2 million by the Federal Court last September after the court found that on 53 occasions between October 2015 and May 2019, Dixon Advisory was the responsible licensee of six representatives who did not act in the best interests of eight clients when they advised these clients to acquire, roll-over or retain interests in the US Masters Residential Property Fund (URF) and URF-related products.
DASS went into voluntary administration in November 2021 and the majority of clients transferred to E&P.
In its results, E&P said: “The Group’s statutory result for the first half of the financial year 2023 was again influenced by non-underlying items such as expenses incurred in responding to regulatory and representative proceedings, Dixon Advisory and Superannuation Services deed of company arrangement execution costs and employee termination payments".
A deed of company arrangement (DOCA) was voted for on 16 December, 2022 in a Tranche A Payment of $15.5 million which was paid to the deed fund on 20 December, 2022, Tranche B Payment of $4 million which was payable within five days after settlement of the representative proceedings and a deposit of $1 million paid to the voluntary administrator to cover costs of disbursements incurred by the administrators.
Employee termination payments totalled $741,000, it said.
“The net impact of these series of payments on the Group’s first half statutory result is approximately $1 million loss as the amounts had already been substantially recognised in the Company’s balance sheet as at 30 June, 2022.”
As well as the DOCA, preparations were underway for a Court-ordered mediation in the Shine Lawyers representative proceedings against the company which would occur no later than 23 March, 2023.
Managing director and chief executive, Peter Anderson, said: “Notwithstanding challenging market conditions, the first half of the financial year 2023 was a marked improvement on the prior half. We made excellent progress against our strategic objectives.
“Out business transition and simplification process is now largely complete. From here, our focus is on delivering growth in our core businesses and we believe we are well placed to achieve this.”
As of 1 February, 2023, the Australian Financial Complaints Authority (AFCA) said it had received more than 1,700 complaints related to Dixon Advisory and Superannuation Services.
Last August, the Australian Securities and Investments Commission (ASIC) urged former DASS clients to lodge a complaint promptly with AFCA if they had suffered bad advice.
AUTHOR
Laura Dew
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