SMSF Association calls for definitive action on Dixon compensation claims

SMSF Association Media Release

The SMSF Association is calling on the Federal Government to end the financial burden of Dixon Advisory’s compensation claims on the financial advice profession.

The Association’s plea follows last week’s announcement that Dixon’s membership of the Australian Financial Complaints Authority (ACFA) will be terminated with effect from 30 June 2024, subject to a 21-day grace period for Dixon’s administrator to appeal the decision.

SMSF Association CEO Peter Burgess says last week’s announcement by the ACFA draws a line under the Dixon complaints that could potentially be funded by the Compensation Scheme of Last Resort (CSLR).

“While we welcome this announcement, the cost of Dixon’s compensation claims lodged before the end of the financial year but paid after, could still amount to many millions of dollars that ultimately will need to be paid for by the advice profession.

“We think there is a perfect opportunity now for the Government to step in and, like the ACFA, draw a line under the advice industry’s financial responsibility by agreeing to cover all unpaid Dixon compensation claims.”

When this scheme was first announced it was understood the Government would cover the first year of the scheme. However, this period was subsequently reduced to only three months and given the slow progress of the Dixon complaints, it meant only one Dixon compensation case has been funded by the Government.

Burgess adds: “We are urging the Government to show their support for the financial advice profession and agree to this simple request.”

The Association has also thrown its weight behind a review of the scheme’s funding model, labelling it “unstainable and untenable”.

“We support the CSLR in principle but expecting small advice firms to pick up the tab for the failures of a large advice firm, which is a subsidiary of an ASX-listed company, is both inequitable and contrary to the Government’s stated policy of making accessibility and affordability of advice a priority.

“Further, the exclusion of managed investment schemes from the CSLR’s funding model risks pushing more costs on to the advice professions and driving more advisers out of the system at time when they are needed most.”