In July, for instance, Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston referred the AIOFP’s concerns around the role “Treasury bureaucrats” have played in the construction of the CSLR to the National Anti-Corruption Commission (NACC) for investigation.

Just a week later, the Financial Advice Association Australia (FAAA) launched a dedicated CSLR hub on its website and a comprehensive review of the litigation that the Australian Securities and Investments Commission (ASIC) has taken against Dixon so far.

The conclusion of its review, the FAAA said, is that a public inquiry is “essential” to fully understand who was responsible for the “debacle”.

Last week, FAAA general manager of policy, advocacy and standards, Phil Anderson, released the first part of a series of papers that the association is delivering to detail the reasons both the FAAA and advisers are angry at how the CSLR has played out.

In his part, the newly nicknamed “Angry Anderson” said the ability of a parent company to wipe its hands of the actions of its subsidiary is at the top of the list of incendiary factors.

“The fact that E&P Financial Group (E&P) simply put its subsidiary Dixon Advisory into administration in full knowledge of the consequence for clients and the rest of the financial advice profession, and in the context of the expected establishment of the CSLR, is very concerning,” Anderson said.

Speaking with SMSF Adviser's sister brand ifa earlier last week, he highlighted the need for a measure that could guard against this kind of action resulting in unrelated financial advisers covering the bill through the CSLR.

“One of the things that we have suggested is that if there was an ability for the CSLR to be able to make a special levy on a parent entity of a business that put a subsidiary into administration, that’s one way of providing a disincentive to place a subsidiary into administration,” Anderson told ifa.

“That is one potential solution, given that there are deep consequences of changing the insolvency laws, then your only other solution is to find a way of penalising the entity that put the subsidiary into administration, and that would be through some sort of special levy.”

In his paper, he noted that E&P had previously claimed it would aim to arrange Dixon’s administration in a manner that would provide “equitable treatment of all DASS clients/creditors”.

Given the class action against E&P was settled in April for a total of $16 million - $12 million of which was covered by PI insurance – Anderson said Dixon clients would not feel receiving “5 cents in the dollar” was an equitable settlement.

“The financial advice profession, facing a bill of as much as $135 million to compensate these clients, certainly does not think that anything about this is equitable,” he said.

“After all, why should financial advisers, who do the right thing, be paying for the misconduct of Dixon Advisory?”

Clients moving to E&P

FAAA chief executive Sarah Abood previously raised concerns over the prospect of E&P benefiting from CSLR payments in May.

A large number of both Dixon advisers and clients moved across to a different E&P AFSL – ASIC recently detailed that about 3,280 of the 4,100 Dixon clients had moved to E&P, along with as many as 39 advisers.

“According to the administrator, this was all done at no cost to Evans & Partners and at no benefit to the creditors of Dixon Advisory,” Anderson said.

“Further, ASIC has taken action against a director of Dixon Advisory for allegedly changing the constitution of Dixon Advisory and executing a deed of acknowledgement of debt just prior to going into administration, seemingly for the reason of avoiding the repayment of a $19 million debt owed to Dixon Advisory by E&P Operations.”

ASIC commenced civil penalty proceedings against Paul Ryan in the Federal Court in August 2023. Hearings on the matter were held in June 2024, however, a judgment is yet to be delivered.

“This alleged conduct is hardly consistent with an entity seeking to achieve an equitable settlement,” Anderson said.

He also pointed to the roughly $134 million in fees that Dixon Advisory and related entities “extracted” from the US Masters Residential Property Fund (URF) from 1 January 2015 and 30 June 2018.

“There is no suggestion that any of this will be returned to the benefit of Dixon Advisory clients who lost so much money on the URF Fund. The $4 million that E&P contributed to the class action settlement is a tiny fraction of the fees that this business received from this fund,” Anderson said.

However, what will “infuriate the advice profession even more” is how much E&P is set to gain from the CSLR.

“Given the high percentage of Dixon Advisory clients who moved over to Evans & Partners, it will be E&P that stands to benefit from the receipt of additional funds under advice, when the compensation is paid by the CSLR into the predominantly SMSFs of the former Dixon Advisory, now Evans & Partners, clients,” he said.

“Going forward, it will be E&P who will be the ones earning fees on this money.”