The Financial Advice Association Australia (FAAA) has secured an inquiry into the collapse of Dixon Advisory, which has left the wider financial planning profession to cover as much as $135 million of the compensation bill for the firm’s misconduct.
Following months of advocacy by the FAAA, a motion calling for an inquiry into the Dixon Advisory collapse was moved by Senator Pauline Hanson in the Australian Senate today, securing cross-parliament support and resulting in a public inquiry being agreed.
The inquiry will be based on terms of reference that the FAAA has advocated for and will seek to address key concerns about the collapse of Dixon Advisory and its impact on the Compensation Scheme of Last Resort (CSLR), including: the causes of the collapse; the effect of the US Masters Residential Property Fund (URF); the actions of key individuals and the regulator (ASIC); the impact of the administration and insolvency issues; and the potential implications for future matters.
Sarah Abood, CEO for the FAAA, thanked Senator Hanson for her advocacy, and the members of the Senate who voted in favour of the inquiry.
“Today marks a major step forward for our profession, and we want to thank Senator Hanson for her support in seeking transparency and for backing Australia’s small financial advice businesses in proposing this inquiry today.
“An inquiry is essential to understanding the full scope of what went wrong with Dixon Advisory - a scandal involving hundreds of millions in client losses - and to ensure it is not repeated.”
It comes after months of advocacy by the FAAA, which has raised concerns over the handling of the Dixon Advisory case and the implications for the broader financial advice profession.
The FAAA met with Treasury last week, and with Minister Stephen Jones in August, to raise key concerns regarding Dixon Advisory and the CSLR. The FAAA also wrote to all parliamentarians last week asking for their support for a public inquiry.
“The FAAA has been a vocal advocate for reforms to the funding model of the CSLR and has repeatedly called for deeper investigation into Dixon Advisory to prevent similar collapses in the future,” Ms Abood said.
“The financial advice profession is made up of thousands of small businesses right across the country, helping Australians achieve their financial goals. We do not have the financial capacity to underwrite the misconduct of large companies, and nor should we.
“This inquiry is a crucial step forward in understanding what went wrong at Dixon Advisory, and ensuring it can’t happen again. We look forward to working with and supporting the inquiry, and to ensuring the CSLR is fairly and sustainably funded to support consumers into the future.”
