AFCA says alleged Dixon losses hit $458m

The Australian Financial Complaints Authority (AFCA) has told the Senate estimates that alleged losses from Dixon Advisory clients are an estimated $458 million.

The total number of complaints received regarding the matter is 2,510, up from 1,948 in mid-February.

The organisation said it had seen a particularly high volume received in the two weeks leading to 8 April which was the date that ASIC had ordered Dixon to remain a member of AFCA.

AFCA has since announced it is looking to expel Dixon from AFCA membership now that date has passed.

Speaking at the Senate economics committee, AFCA chief operating officer Justin Untersteiner, was asked by Senator Andrew Bragg how much losses totalled.

“If we look at open complaints – purely those claims that have been lodged by consumers and are yet to be vetted by AFCA, some may be lower than this, there is also a cap of $150,000 that hasn’t been taken into account – we have complaints that were lodged at the introduction of the legislation of $312 million. Further claims beyond that date total $146 million.

“In the closed category, we have awarded $5.7 million in losses.”

“Typically complaints relate to the advice, conflicts of interest and the appropriateness of the advice. But we have only assessed a small number out of many and some may relate to the managed investment scheme in which case we would close that matter.”

AFCA chief executive, David Locke, said only 47 matters have been determined so far, which he described as a “drop in the ocean” given the high volume.

Of those cases that had been determined, Dr Jean Smith, deputy chief ombudsman,

“The primary allegation relate to best interest duty and the duties of advisers in the provision of advice to the clients of Dixon. They all relate to advice to invest in either of the two managed investment schemes, whether the advice was appropriate, whether there was adequate disclosure of conflicts of interest in relation to the ownership of the company and if that would have had a bearing on how clients made a decision to invest in those schemes or not.

“We are only looking at whether there has been an issue with the advice relationship and whether or not the adviser in those circumstances, together with the financial firm, have met all of their obligations.”