Why didn’t ASIC target individual Dixon advisers?
ASIC has detailed to the Senate Economics Committee why it decided to pursue action against Dixon Advisory rather than the individual advisers involved in the wrongdoing.
The problems surrounding Dixon, which have resulted in over 2,500 complaints made to the Australian Financial Complaints Authority (AFCA), cover conflict of interest and inappropriate advice after clients were advised in the US Masters Residential Property Fund (URF) and URF-related products, which were issued and operated by related companies to Dixon Advisory.
Appearing before the committee on 4 June, deputy chair Sarah Court was asked by Senator Andrew Bragg about the enforcement action taken by ASIC and whether it had done enough.
He also questioned why ASIC had opted to pursue against Dixon Advisory rather than the individual advisers.
Responding, Court said: “ASIC investigated the provision of financial advice to a subset of Dixon clients because ASIC was concerned advisers were providing advice that was not in the best interest of those clients. We focused on the entity as opposed to taking action against individual advisers because Dixon held the AFSL. Dixon has an obligation to ensure that advisers under its AFSL are doing so in full compliance with corporations law.
“We filed that in 2020 and the court found in ASIC’s favour. The court imposed a civil penalty of $7.2 million together with $800,000 in costs. That amount was a significant penalty at the time for this kind of conduct.”
However, this $7.2 million penalty was unable to be paid in full as Dixon went into voluntary administration in 2022.
“Dixon went into voluntary administration in January 2022 and ASIC suspended the AFSL a few months thereafter so it’s not surprising that it has not paid the pecuniary penalty,” Court continued.
“In relation to Evans & Partners holding company, ASIC did consider if it could take action but the way our laws work is we have to deal with the entity that is engaged in the conduct, and there was no evidence that Evans & Partners was involved in the conduct.
“We also investigated the various directors of Evans & Partners and Dixon, and we have taken subsequent action in relation to one of those who we consider did have culpability.
“Far from not taking action, I would suggest we have taken considerable action. We are very aware of the public’s interest, but this is where we have ended up.”
She said it is a decision taken on a “case by case basis” whether ASIC pursues the individual advisers or the AFSL holder.
AUTHOR
Laura Dew
Recommended for you
The board of Insignia Financial has reached a decision regarding the possible acquisition of the firm by US private equity giant Bain Capital.
Six of the seven listed financial advice licensees have reported positive share price growth in 2024, with AMP and Insignia successfully reversing earlier losses.
There has been a 16.3 per cent rise in the wealth of Australian billionaires this year to over $200 billion, UBS finds, as Australian advisers shift their offerings to meet this expansion and service their unique needs.
AZ NGA is looking to triple in size over the next five years as US investment giant Oaktree completes its $240 million investment in the professional services company.
“Far from not taking action, I would suggest we have taken considerable action. We are very aware of the public’s interest, but this is where we have ended up.”
Really! What about all the advisors you went after post Hayne, via look back!! etc., and the lives and good business you destroyed. This whole saga with Dixons is a disgrace.
It would seem to me that most of the advisers would have had some idea it was dodgy, just based on the few TV adds i saw some years ago JG
Dixon got away with being dodgy for years by ensuring that they had 'friends in high places' and THAT was achieved by using the (then) conventional wisdom that they were independent, non-commission-taking and aligned with public sector standards of ethical behavior. That's how you put the con into confidence. ASIC did what it could in the circumstances, but remember, for years Dixon was an untouchable brand. There are many lessons in this saga. Blaming ASIC is not the key. An understanding how complacence is built and exploited is what we need and we need to apply it to the current landscape..
This is an absolute disgrace through and through. How about every adviser who will be liable to foot the bill lodges an AFCA complaint against Evans and Partners?
So can ASIC tell us whether any of the ex-Dixon advisers are advising elsewhere? Would bear some scrutiny wouldn't it`?
As of today (6th June, 2024) there have been 8 determinations published by AFCA against Dixon Advisory. All cases have been found against Dixons. The common thread in all cases is that the Investment Committee of Dixon Advisory has directed it's investment advisors to make the recommendations to invest in related party investments, in which they would benefit from the spoils. The head of Dixon Advisory at the time of the wrong doings was Alan Dixon, who also was behind the setting up and running of URF as well as many of the other related patty investments. So draw your own conclusions. Why wasn't and isn't criminal proceedings being actioned?
The advisers are subject to the code of conduct, not the AFSL. They were fully aware of the conflicts involved and whether it was in the best interest of the client. ASIC has no excuses for not pursuing the advisers in this matter. I would also like to know what part ASIC played in the collapse of the entity.