Aggregated News From Investment Management Regulators

ASIC commences civil penalty proceedings against Dixon Advisory for alleged conflicts, best interest failures and inappropriate advice

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ASIC has today commenced proceedings in the Federal Court of Australia against Dixon Advisory and Superannuation Services Limited (Dixon Advisory), a subsidiary of ASX-listed Evans Dixon Limited (Evans Dixon).

ASIC alleges that Dixon Advisory representatives failed to act in their clients’ best interests and to provide advice that was appropriate to the clients’ circumstances.

ASIC also alleges that, in giving the relevant advice, Dixon Advisory representatives knew or ought to have known that there was a conflict between their clients’ interests and the interests of entities associated with Dixon Advisory within the Evans Dixon group, and failed to give priority to the clients’ interests.

This action relates to financial advice given to eight sample clients, who were advised to invest in the US Masters Residential Property Fund (URF) and URF-related products between 2 September 2015 and 31 May 2019.

ASIC further alleges that a total of 51 separate instances of financial advice were provided to the eight sample clients in the relevant period, each of which resulted in two or more contraventions of ‘best interests duties’ under the Corporations Act.

ASIC is seeking declarations of contraventions and pecuniary penalties against Dixon Advisory. The maximum civil penalty for contraventions alleged against Dixon Advisory is $1 million per contravention for contraventions prior to 13 March 2019, and $10.5 million per contravention after that date.

ASIC is also seeking orders that Dixon Advisory:

  1. put in place appropriate systems, policies and procedures to ensure that Dixon Advisory representatives comply with best interests’ obligations; and
  2. provide a written report from an independent expert confirming this compliance.

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Concise Statement

Originating Process

Background

Dixon Advisory holds an Australian financial services licence and its representatives provide financial advice services to Australian consumers. Section 961K(2) of the Corporations Act imposes liability on licensees for contraventions by their representatives of duties including sections 961B (best interests), 961G (appropriate advice), and 961J (conflicts between the client’s interests and those of the provider) of the Act.

The URF is an ASX-listed property fund established in 2011 to give investors exposure to the US residential property market, by investing in residential property in the New York metropolitan area. The URF was established by Dixon Advisory and at the relevant time, paid substantial fees to several companies owned by Evans Dixon, including Dixon Advisory.

Moneysmart.gov.au has useful information for consumers about choosing a financial adviser, including how to complain about a financial adviser and what to do if their adviser is banned.

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Regulator Information

Abbreviation: ASIC
Jurisdiction: Australia

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