Dixon Advisory’s AFSL has been suspended by ASIC with the corporate regulator informed by administrators that “most” clients have transitioned to alternate financial services providers of their choice.
After announcing it was entering voluntary administration in January, the firm stated its goal is the transfer of orphaned clients with mounting liabilities likely to make it insolvent.
ASIC announced in a media release Tuesday morning the terms of the suspension will allow Dixon’s licence to operate until 9 May, 2022 to transition the remaining clients.
It will retain its licence until 8 April, 2023 to maintain dispute resolution arrangements (i.e. Australian Financial Complaints Authority membership) and compensation arrangements.
Conflicts of interest
The mounting liabilities are a result of a class action which accused Dixon Advisory of providing conflicted financial advice relating to its proprietary ASX-listed US Masters Residential Fund.
The fund performed poorly during 2018 and 2019 after much of its client based was advised to invest in it.
The company said the appointment of voluntary administrators became necessary due to the increased number of claims 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,” Evans Dixon chief executive Peter Anderson said in January.
Cautionary tale
Dixon’s troubles have dominated industry discourse in 2022 with opponents of vertical integration highlighting the case as another example of its risks.
After years of its own scandals, AMP has been put on defensive duties yet again despite not being responsible for any wrongdoing in this instance.
In March at Professional Planner’s Researcher Forum, AMP Advice chief executive Matt Lawler said AMP distanced itself from the Dixon-type of model by having different sections of the business being “excellent” at what it does.
“Through the work we’ve done and the decisions we’ve made, AMP owns verticals but we’re not vertically integrated – that’s an important distinction,” Lawler said at the event.
It’s been a similar line towed by CEO of AMP Alexis George who highlighted the demarcation of its businesses.
The ability for in-house managed accounts to let advisers pose as product managers has meant it’s not just the bigger institutions finding themselves with potential conflicts, and ASIC has taken notice.
Vertical integration was left out of the terms of reference of the Quality of Advice Review, although it will review the distinction between financial product advice and financial advice.
