Dixon Advisory cops $7.2m fine in Federal Court

The wealth manager’s advisers failed to act in their clients’ best interests when they directed them to buy or remain invested in its US residential property fund.

The Federal Court has slapped Dixon Advisory with a $7.2m fine, finding that the wealth manager’s advisers failed to act in their clients’ best interests when they directed them to buy or remain invested in its US residential property fund.

Handing down the Judgement on Monday, Justice Timothy McEvoy said six Dixon representatives had also failed to provide advice appropriate to their clients’ circumstances.

“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,” Justice McEvoy said.

“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 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, rollover or retain interests in the US Masters Residential Property Fund and URF-related products.

In some cases, inappropriate advice resulted in the client’s self-managed superannuation fund being insufficiently diversified and exposed to risk of capital loss, the court found.

Australian Securities & Investments Commission deputy chair Sarah Court said licensees needed to ensure their representatives were 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,” she said.

Dixon Advisory was also ordered to pay ASIC’s legal costs of $800,000.

The penalty comes after the corporate regulator commenced proceedings against Dixon in September. In July 2021, ASIC and Dixon Advisory entered into an agreement to resolve the civil penalty proceedings, with Dixon admitting to a number of allegations in October.

Dixon Advisory was placed in voluntary administration in January and its Australian Financial Services licence suspended in April.