Court hits Dixon Advisory with over $7 million penalty
The Federal Court has ruled that Dixon Advisory and Superannuation Services’ (Dixon Advisory) representatives failed to act in their clients’ best interests and failed to provide advice appropriate to their clients’ circumstances.
The court revealed that on 53 occasions between October 2015 and May 2019, Dixon Advisory was the licensee of six representatives who did not thoroughly investigate eight clients’ circumstances before advising them to acquire, roll-over, and retain interests in the US Masters Residential Property Fund (URF) and URF-related products. The advice resulted in some clients’ self-managed superannuation funds being insufficiently diversified and exposed to capital loss risks.
As a result, Justice McEvoy ordered Dixon Advisory to pay a $7.2 million penalty. It also ordered that if the company – currently in voluntary administration – resumes providing financial services, it must have appropriate systems, policies, and procedures to ensure its representatives act in their clients’ best interests.
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“There is no evidence that the (Dixon Advisory) representatives conducted the necessary reasonable investigations into the recommended financial products or any alternative financial products, nor is there evidence that they considered the personal circumstances of the clients,” Justice McEvoy said. “The contraventions were not the result of isolated or unauthorised conduct of the representatives. Six representatives committed the contraventions over a period spanning some three and a half years.”
The federal court also ordered Dixon Advisory to pay the Australian Securities and Investments Commission’s (ASIC) legal costs of $800,000.
Commenting on the ruling, ASIC Deputy Chair Sarah Court reminded licensees to ensure their representatives consider their clients’ specific needs and circumstances before providing advice.
“Advice that fails to reflect client circumstances − or advice models that lead to one-size-fits-all outcomes – are less likely to meet best interest duty obligations and can expose clients to a risk of capital loss,” Court added.
