The Senate’s inquiry into Dixon Advisory and wealth management companies more broadly lapsed at the end of the last Parliament and, despite the Financial Advice Association Australia (FAAA) expressing confidence it would be “remounted”, the economics references committee has chosen not to pick it back up.
According to a document that committee chair Jane Hume tabled in the Senate this week, the committee met on 31 July and “resolved to not recommend that the inquiry into wealth management companies be re-adopted”.
The inquiry was one of two that had not been resolved at the time the last Parliament was dissolved, with the inquiry into micro-competition opportunities being re-adopted.
FAAA chief executive Sarah Abood said the association is “deeply disappointed” that the committee will not continue the inquiry.
“This important inquiry was launched in September last year, to investigate the collapse of wealth management companies (such as Dixon Advisory), and the implications for the sustainability of the Compensation Scheme of Last Resort (CSLR),” Abood said in a statement.
“The decision to end the inquiry seems extraordinary, particularly in the light of recent news about the collapse of Shield and First Guardian, potentially involving over $1 billion in consumer losses from their super.
“This scandal makes it clear that the issues the Inquiry was investigating are not resolved, and that the misdeeds at Dixon Advisory are not an isolated case. It betrays the victims, and all consumers, who have put their faith in the government to fully investigate these collapses so we can understand how they happened, and what can be done to prevent them in the future.
“We call on all members of parliament to support the reinstatement of this critical Inquiry, with an extended remit to include the collapse of Shield and First Guardian.
“We owe it to the victims not to walk away from this.”
Senator Pauline Hanson moved a motion in the Senate for an inquiry into the collapse of Dixon Advisory and its impact on the CSLR in September last year, with its approval welcomed by the financial advice sector.
“Today marks a major step forward for our profession, and we want to thank Senator Hanson for her support in seeking transparency and for backing Australia’s small financial advice businesses in proposing this inquiry today,” Abood said in September.
The continual delays in progressing to hearings had previously caused the reporting date to be moved back four months from March to 28 July – which clearly signalled the inquiry would need to be closed down and then restarted.
However, there was a broad expectation that the inquiry would be picked back up, with FAAA general manager policy, advocacy and standards Phil Anderson noting last month that “the FAAA is now working closely with the financial services minister and the shadow minister to get the inquiry remounted”.
“Both parties have indicated that they support the inquiry and we are currently going through the processes required to do so,” Anderson said on LinkedIn.
“There is no indication that this won’t succeed. The FAAA continues to believe an inquiry is essential to understand the full scope of what went wrong with Dixon Advisory and to ensure it is not repeated.
“The recent experience with Shield and First Guardian emphasises the importance of an inquiry into such matters.”
Multiple warnings were provided to the regulators well before both of these disasters occurred. Many of these were from the advice community that has subsequently borne the brunt of the regulators failure to act. An independent inquiry would clearly identify some very embarrassing government department failures and the lack of justice inherent in the CSLR. One has to wonder whose interest is being served by canning this inquiry – certainly not the public’s nor the advice community’s.
So, despite the opposition being in power, we once again have Lame Jane doing what she has always done best… absolutely nothing!!!
But that’s not important… we don’t need a Senate enquiry to tell us what the causes are… Conflicts of Interest in a Vertically Aligned system.
Highlighted by the Royal Commission in 2018: Banks and aligned advisers “selling” products provided by their aligned companies which were not necessarily in the best interests of the client…
Current problems… Advisers having an obligation to their licensee, who benefit by the investment into aligned products/providers (Dixons), or advisers who are happy to breach the FASEA ethical standards, accepting extraordinary payments to promote rubbish which is sub-standard and not in the clients’ best interests (Shield and First Guardian).
In the future… Superannuation funds providing aligned advice to members which won’t end up being in the best interests of the client, just a typical product sale, which it should be noted as.
The “Best Interest Duty” should not be left only to the advice cohort to identify perpetrators, because it is rarely that a good adviser will be able to see breaches of another adviser. There are other players which would be able to identify bad practices though… Finance brokers would be able to identify situations whereby the best interest duty may be breached in an SMSF, accountants may be able to identify clients who are not “wholesale” investors, and platforms should be able to do (and review) their due diligence on investments they’re allowing their clients/members to invest in.
There you are, Jane… I’ve just done the work for you. Pad it out with about 600 pages of padding and call it your own. 😛
One could reasonably conclude that an independent inquiry into the Dixon disaster might rattle a few skeletons in the Labor closet!
Is there perhaps some information that certain people don’t wish to be aired in public perhaps?
Where is the public interest in not holding an enquiry?
Meanwhile product manufacturers keep pumping out sh!t and the bills keep getting added to the CLSR.
Nothing to see here folks…all is fine and dandy.
Where there’s smoke there’s fire but this government doesn’t seem to like transparency, just narratives to suit their vested interest requirements, div296 anyone?