Dixon Advisory has entered voluntary administration with the expectation that mounting liabilities will make it insolvent in the future, with the transfer of orphaned clients a stated goal for the wealth group.
In an ASX announcement on Wednesday morning, directors of Dixon Advisory and Superannuation Services (DASS), which is a wholly-owned subsidiary of E&P Financial Group Limited (EP1), said “mounting actual and potential liabilities mean it is likely to become insolvent at some future time”.
Those liabilities, which come from a class action accusing DASS of providing conflicted financial advice as well as claims being determined by AFCA and ASIC, ultimately forced the hand of the wealth group, with thousands of advice clients set to be transferred or released to a replacement service provider of the client’s choice with “minimal disruption to client service”.
The group has struggled with conflict of interest issues relating to its proprietary ASX-listed US Masters Residential Fund, which performed poorly across 2018 and 2019 after much of its client based was advised to invest in it.
EP1 said it intends to propose a deed of company arrangement to the administrators that would include a comprehensive settlement of the representative proceedings and all other claims.
Peter Anderson, EP1 chief executive and managing director, said the appointment of voluntary administrators to DASS became necessary due to the increased number of claims against DASS and the potential associated financial liabilities.
“It has also become apparent that settling individual claims as they arise will likely lead to inequities between client creditors,” Anderson said.
“Voluntary administration provides an appropriate framework to ensure all client creditors are treated equitably. Importantly, no client assets are at risk as a result of this process, and we will strive to minimise any disruption to clients who will have ongoing access to their adviser(s).”
PwC partners Stephen Longley and Craig Crosbie had been appointed as administrators.