AIOFP directs Dixon concerns to ASIC CEO

Over the past few weeks, the Association of Independently Owned Financial Professionals (AIOFP) has sent a series of emails to Financial Services Minister Stephen Jones in which executive director Peter Johnston raised concerns over “suspicious circumstances” related the construction of the Compensation Scheme of Last Resort (CSLR) and explained the AIOFP has referred the matter to the National Anti-Corruption Commission (NACC).

The latest email, directed to Australian Securities and Investments Commission (ASIC) chief executive Greg Yanco, and forwarded to “every federal politician”, includes a number of questions over the enforcement actions the corporate regulator took against Dixon Advisory.

Noting that ASIC has taken Federal Court action against Dixon director Paul Ryan for alleged breaches of directors’ duties, Johnston queried why, given the regulator had secured a $7.2 million fine against Dixon, there has not been “any action against the Dixon executives or advisers who presided over their advice methodology and culture”.

In recent questions on notice from Senate estimates, Liberal senator Andrew Bragg had also pushed the regulator on why the directors and management of Dixon also escaped punishment.

“Presumably, if you decided not to take action against individual advisers, then you must have decided that the core of the problem was the underlying business model. If this was the case, then why wasn’t action taken against management and directors who designed and operated that business model?” he asked.

ASIC responded that, given its investigation focused upon “overall systemic issues” related to the business model, “ASIC considered the appropriate response was to take action against DASS for failing to prevent the ongoing advice failures”.

“There was insufficient evidence or grounds arising from the investigation to take action against DASS management and directors,” it said.

Responding to another question taken on notice from Bragg, this time in a Senate economics legislation committee hearing, ASIC said the decision on how to proceed in terms of enforcement action was a matter for what was known at the time as the enforcement committee.

“This committee was chaired by ASIC’s deputy chair for enforcement Daniel Crennan QC and all commissioners, apart from one, were present at that meeting,” ASIC said.

“The decision to commence the litigation against DASS was a two-step process. As to the first step, the commission enforcement committee resolved on 10 August 2020 to commence civil litigation against Dixon Advisory and Superannuation Services Limited for contraventions of s 961K(2) of the Corporations Act 2001 (Cth) based on contraventions of ss 961B, 961G and 961J of the Corporations Act by representatives of Dixon Advisory.

“Further, it was resolved to nominate deputy chair Crennan QC to provide final approval to file the necessary court documents to commence that civil litigation. The CEC meeting was chaired by ASIC’s deputy chair for enforcement Daniel Crennan QC and all commissioners, apart from one, were present at that meeting.

“As to the second step, on 3 September 2020, deputy chair Crennan QC gave the final instructions to file the proceeding after approving the necessary court documents.”

Crennan resigned in October 2020 following revelations that the regulator incorrectly paid $70,000 worth of his rental costs.

Johnston asked Yanco: “Now that this ASIC person is no longer an employee, are you going to commence action against the Dixon executives/advisers?

“We understand one of these former Dixon executives is now the director of the adviser unit in the Department of Treasury, considering this person was in charge of Dixon Advice, are you comfortable with this outcome?”

The AIOFP also previously referred this appointment to the NACC, saying “we find this rather confusing”.

“We believe a group of Canberra bureaucrats have corruptly manipulated the CSLR/Dixon issue to force the advice industry to compensate bureaucrats who lost personal savings in the Dixon product failures,” Johnston added in the email to Yanco.

“We have lodged a complaint with the National Anti-Corruption Commission (NACC), we are requesting ASIC delay invoicing advisers for the CSLR levy until NACC has reviewed the matter, will ASIC comply with this request?”