The Federal Court has imposed a $7.2 million penalty on Dixon Advisory and Superannuation Services Limited (Dixon Advisory) after six representatives failed to act in their clients’ best interests and failed to provide advice appropriate to their clients’ circumstances.
ASIC Deputy Chair Sarah Court said ‘Licensees need to ensure their representatives are taking into account their clients’ specific needs and circumstances. 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.’
The Court found that on 53 occasions between October 2015 and May 2019, Dixon Advisory was the responsible licensee of six representatives who did not act in the best interests of eight clients when they advised these clients to acquire, roll-over or retain interests in the US Masters Residential Property Fund (URF) and URF-related products.
The Court found Dixon Advisory representatives did not conduct a reasonable investigation of the clients’ circumstances before providing the advice. In some cases, this inappropriate advice resulted in the client’s self-managed superannuation fund being insufficiently diversified and exposed to risk of capital loss.
In handing down judgment, Justice McEvoy remarked, ‘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.
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‘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 Court also ordered that if Dixon Advisory, currently in voluntary administration, resumes providing financial services, Dixon Advisory must have in place appropriate systems, policies and procedures to ensure its representatives act in the best interests of clients.
Dixon Advisory was also ordered to pay ASIC’s legal costs of $800,000.