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An SMSF advice firm has entered a conditional agreement with ASIC and will pay $7.2 million to resolve civil penalty proceedings relating to alleged breaches of clients’ best interest.
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SMSF firm forks out $7.2m to resolve ASIC court proceedings
12 July 2021
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On 8 July, ASIC and Dixon Advisory & Superannuation Services (Dixon Advisory) entered into a heads of agreement to resolve civil penalty proceedings commenced by ASIC against Dixon Advisory in the Federal Court in September 2020.
ASIC’s proceedings relate to best interests duties under the Corporations Act, including allegations that Dixon Advisory representatives failed to act in their clients’ best interests to provide financial advice appropriate to the clients’ circumstances.
“The heads of agreement follow court-ordered mediation and propose that Dixon Advisory pay a $7.2 million penalty for breaches of the Corporations Act as well as $1 million to pay ASIC’s costs of its investigation and legal proceedings,” ASIC said.
“The in-principle resolution between the two parties is subject to approval from the court.”
ASIC noted it will provide further comment after the matter has been determined by the court.
The regulator had commenced proceedings in the Federal Court against Dixon Advisory in relation to alleged failures to act in the best interest of clients when providing investment advice to SMSF clients back in September last year.
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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, the corporate regulator said.
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.
ASIC found 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.
According to documents lodged by ASIC as part of the proceedings, the eight sample clients engaged Dixon Advisory and Superannuation Services to provide investment advice, generally, in relation to their SMSFs.
Each of the sample clients was a “retail client” for the purposes of chapter 7 of the Corporations Act.
ASIC alleged 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.
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