Why didn’t ASIC target individual advisors at Dixon?

The issues surrounding Dixon, which have led to over 2,500 complaints to the Australian Financial Complaints Authority (AFCA), involve conflicts of interest and inappropriate advice given to clients who were recommended to invest in the US Masters Residential Property Fund (URF) and related products issued by companies affiliated with Dixon Advisory.

During a committee hearing on June 4, deputy chair Sarah Court was questioned by Senator Andrew Bragg regarding the enforcement actions taken by ASIC and whether sufficient measures had been implemented. Bragg specifically asked why ASIC chose to pursue Dixon Advisory as a whole rather than targeting individual advisers.

In response, Court explained, “ASIC investigated the provision of financial advice to a subset of Dixon clients because ASIC was concerned advisers were providing advice that was not in the best interest of those clients. We focused on the entity instead of taking action against individual advisers because Dixon held the AFSL and had an obligation to ensure that advisers under its AFSL complied fully with corporations law.

“We filed the case in 2020, and the court ruled in ASIC’s favor, imposing a civil penalty of $7.2 million along with $800,000 in costs. This was a significant penalty at the time for this type of conduct.”

However, Dixon was unable to pay the full $7.2 million penalty as it went into voluntary administration in 2022. Court added, “Dixon went into voluntary administration in January 2022, and ASIC suspended the AFSL a few months later, so it’s not surprising that the pecuniary penalty has not been paid.”

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