Federal Court has imposed a multimillion dollar penalty on Dixon Advisory
The Federal Court has imposed a $7.2 million penalty on Dixon Advisory following findings that six of its representatives failed to act in the best interests of their clients and provided advice that was inappropriate for their clients circumstances.
ASIC Deputy Chair Sarah Court emphasised the importance for licensees to ensure their representatives consider clients' specific needs and circumstances.
The Court determined that between October 2015 and May 2019, Dixon Advisory, as the responsible licensee, allowed 6 of its representatives to advise clients on acquiring, rolling over, or retaining interests in the US Masters Residential Property Fund (URF) and related products without conducting reasonable investigations into their circumstances. This led to instances where clients' self-managed superannuation funds were inadequately diversified and exposed to capital loss risks.
Justice McEvoy noted that these breaches occurred over a span of three and a half years and involved multiple representatives who failed to conduct necessary investigations into recommended financial products or alternative options that would have been more suitable to clients' personal circumstances.
In addition to the financial penalty, the Court ordered Dixon Advisory, currently under voluntary administration, to implement robust systems, policies, and procedures ensuring its representatives act in clients' best interests if they ever resume financial services operations.
Dixon Advisory was also directed to pay ASIC's legal costs amounting to $800,000.
Background Information
ASIC initiated proceedings in September of 2020, reaching a heads of agreement with Dixon Advisory on the 8th of July, 2021.
The URF, established by Dixon Advisory in 2011, aimed to provide ASX-listed exposure to the US residential property market.
Following Dixon Advisory's voluntary administration on January 19, 2022, ASIC suspended its Australian Financial Services licence on April 19, 2022. The administrators of Dixon Advisory consented to the continuation of proceedings and did not contest ASIC's sought orders.
Former clients of Dixon Advisory who may be eligible for compensation under a future Compensation Scheme of Last Resort (CSLR) are advised to lodge complaints with the Australian Financial Complaints Authority (AFCA).
A valid AFCA complaint is essential to have any eligibility under the future CSLR.
This information comes from the ASIC Media Release (22-256MR) published on the 19th of September 2022, the information is current at the time of publishing.