Under 5% of Dixon complaints have been processed

The Australian Financial Complaints Authority (AFCA) has revealed the number of Dixon Advisory and Superannuation Services (DASS) complaints it has closed – with the number reflecting just 4.6 per cent of total Dixon complaints.

As of 30 June 2024, AFCA confirmed the total complaints it had received relating to losses under Dixon stood at 2,773.

Dixon’s AFCA membership ceased on 30 June, preventing it from accepting new complaints relating to the financial firm.

The complaints authority has now confirmed that as of 29 October, it has now closed 128 Dixon Advisory complaints received since AFCA’s inception on 1 November 2018, including 91 determinations.

At its inaugural industry forum in Sydney last week, the Compensation Scheme of Last Resort (CSLR) said it expects the upcoming 2025–26 levy attributed to personal financial advice will exceed the $20 million subsector cap.

Speaking with ifa, Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards, Phil Anderson said that if there is a delay in AFCA’s processing of complaints related to Dixon, then the CSLR levy for the next financial year may not be “as bad as the worst case” scenario – a subsector total above $50 million.

“If you think $135 million across four years, in 24–25, Dixon Advisory makes up about $11 million of that. So that gives you $124 million,” he said.

“If you had $50 million in 2025–26, $50 million in 26–27, then you got roughly $24 million left for 27–28. It’s a matter of whether that peak gets pushed back.

“If it’s going to take four years to process all these Dixon Advisory complaints, then we’re going to see some big numbers in the next few years.”

FAAA chief executive Sarah Abood, speaking on a webinar on Tuesday, added that the speed with which AFCA can process Dixon complaints is “the handbrake” on what the CSLR levy will reach.

“It’s pretty concerning that total for next year will exceed the $20 million cap for financial advice, and that that’s almost due to the impact of Dixon Advisory,” Abood said.

“How much it will exceed the cap, we don’t yet know. That’s in large part dependent on how quickly AFCA can get through the Dixon advisory. So that that’s the handbrake, if you like.

“AFCA’s been hiring people, putting money into systems and so on, and trying to gear up these issues as quickly as possible.”

She reiterated that a major concern for the FAAA is exactly what Financial Services Minister Stephen Jones will do about the cap being exceeded.

“The minister has a great deal of discretion as to what happens to payments in any single year that are above the $20 million sector cap. He could choose to charge us and just add it to our bill,” Abood said.

“He could choose to attribute it to another sector, or sectors, pretty much the sky’s the limit, and we’re really keen to get from the minister a clear statement of what is the plan, what’s going to happen with amounts that exceed the sector cap.

“You can imagine, we’ve been extremely vocal about this. The sector cap was doubled from the original legislation. It was originally $10 million, which I think nobody was super happy about, but was far more reasonable and affordable than $20 million.

“At the same time as that sector cap was doubled, our numbers halved. So effectively it quadrupled the amount advisers could be paying under the scheme. So that’s a real problem. It’s one of the discussions we’re having with Treasury, and we’re keen to get an answer on that pretty quickly.”

Last month, it was confirmed that the Senate economics references committee would be investigating the collapse of Dixon through an inquiry and examining how this failure has influenced the development and ongoing viability of the CSLR.

The motion for the inquiry was proposed back on 17 September by Pauline Hanson’s One Nation Party. A final report from the committee, which is chaired by Labor senator Jess Walsh, is due by the last sitting day in March.

Individuals and organisations are invited to make submissions to the inquiry by 1 November.