Dixon victims and the Compensation Scheme of Last Resort. What’s the scam?

The long and sorry saga of Dixon Advisory draws to a close as the administrators ride into the sunset with fat fees, and clients are left to nurse their financial wounds.

The scam is the Australian Financial Complaints Authority (AFCA) and a compensation scheme that punishes the good guys to pay for the misdeeds of others.

The Compensation Scheme of Last Resort (CSLR) provides compensation of up to $150,000 to eligible consumers who have an unpaid determination from AFCA “relating to personal financial advice provided to retail clients” on financial products, including funds management and lending.

In the case of Dixon Advisory, its clients were left with 4 cents to the dollar of losses incurred following a settlement with their administrators. Losses amounted to hundreds of thousands of dollars for Dixon’s many Self-Managed Super Fund clients. Dixon’s clients were advised to make claims on the CSLR for additional compensation, and many of them have.

So far, 1643 claims have been made, according to the AFR ($), estimated to be close to $200M in total, with more to come before the claims deadline of June 29.

Claims related to the Dixon debacle comrpise 80% of all claims made on the CSLR to date.

The CSLR scheme is largely funded by the industry – e.g. banks and financial planners – through a levy, and not by the Government. It means that almost 2,800 registered financial planners will see their levy increased at least three-fold, to approx. $4,500 each.

Dixon Advisory is no more, but the scam it perpetrated on thousands of its clients is casting long shadows over the financial planning sectors. Alan Dixon & co. didn’t just rob Peter to pay themselves, they got Paul to foot the bill.

The Dixon Advisory saga ends, with lawyers, accountants and government coffers to benefit

Kim Wingerei

Kim Wingerei is a businessman turned writer and commentator. He is passionate about free speech, human rights, democracy and the politics of change. Originally from Norway, Kim has lived in Australia for 30 years. Author of ‘Why Democracy is Broken – A Blueprint for Change’.