In cancelling Dixon Advisory’s AFSL in April 2023, the ASIC had required it to remain an AFCA scheme member until at least 8 April 2024.

However, the expulsion has now been completed and Dixon’s membership officially ended on 30 June 2024, marking an end to the ability of clients who lost money to lodge complaints with the scheme.

In an update on Wednesday, AFCA said that as at 30 June 2024, AFCA has registered 2,773 complaints against Dixon Advisory.

AFCA cannot accept any new complaints about Dixon Advisory. This is because AFCA can only accept complaints about firms that are current members of the AFCA scheme,” the complaints authority said.

“The expulsion of Dixon Advisory does not prevent AFCA from considering and finalising complaints received on or before 29 June 2024.

“Work is well under way, but it will take time to get through the large number of Dixon complaints. We thank people for their patience. It is important that this work is conducted with the usual rigour that’s required.”

The figure is an increase of 263 complaints from the last reported number, when AFCA told Senate estimates that complaints had hit 2,510.

The estimated cost of each Dixon complaint is $120,000, taking into account the cost of remediating the client and the expenses to process the case, meaning the flurry of complaints before the deadline could end up costing the advice profession $31.6 million through the Compensation Scheme of Last Resort (CSLR).

Financial Advice Association Australia (FAAA) general manager policy, advocacy and standards, Phil Anderson, told ifa the FAAA is pleased that the Dixon advisory membership of AFCA has come to an end, which “now locks a cap on the total”.

“But we are very concerned about what was evidently a late rush of an extra 263 in the last month,” Anderson said.

He added: “We've now got 1,134 cases that are going to be industry funded … we're talking about $136 million. That is a very sizable number, and it's one that worries us greatly, and we will be vigorously continuing our CSLR advocacy campaign, particularly with that escalating our concerns.”

In a statement, FAAA chief executive Sarah Abood that it was unsurprising that there was a large number of complaints made in the final weeks of Dixon's membership.

“Now that Dixons’ AFCA membership has finally ceased – after two false deadlines, and almost 2.5 years after being put into administration – we can see the full potential impact of this matter on our profession and the costs we may need to pay for it, via the CSLR,” Abood said.

She said while the final number of 2,773 complaints is considerably less than the administrator’s estimate of 4,606 investors whose losses in the US Masters Residential Property Fund (URF) made them potential creditors, "this is still a huge number of complaints that will likely take years to process".

“These figures serve to highlight once again many serious flaws in the funding model for the CSLR, a model which is both extremely unusual and extremely unfair – and in our view, fundamentally unsustainable,” Abood said.

“Estimates suggest financial advisers could be forced to pick up as much as $135 million of claims related to Dixon Advisory, whilst the parent company (E & P Financial Group) has settled its class action for around 4 cents in the dollar while continuing to operate and advise many of the affected clients.

“This highlights a deep flaw in the CSLR funding model that must be fixed. The Dixons scandal is on such a massive scale that it warrants a public inquiry into the circumstances that led to this failure and recommendations to ensure this cannot happen again.”

The FAAA also listed a range of actions that it said need to be "urgently taken in order to fix the CSLR funding flaws":

1. The CSLR funding model must be prospective, not retrospective. Advisers should not be paying for matters that occurred well before the scheme came into being.
2. The government needs to pay the first full year of operation of the scheme as was originally promised, rather than just three months.
3. The government should re-instate the original sector cap (a maximum of $10 million that could be levied per sector), rather than the $20 million that currently applies.
4. Our sector should be indemnified against future CSLR claims, where a matter has been reported to ASIC and ASIC has chosen not to act, or has substantially delayed action.
5. The government must act to ensure that large vertically integrated groups cannot avoid paying fair compensation to consumers by putting a subsidiary into administration.
6. The government must ensure that all other avenues for client compensation have been exhausted before financial advisers are charged.
7. A party must be appointed to defend complaints against entities no longer in existence. At present no one is speaking for the advice provided to the consumer or defending these claims.

“We consider these actions to be urgent in order to secure a sustainable and fair funding base for the CSLR so that consumers can continue to receive fair compensation if they have suffered a loss due to poor advice,” Abood said.