)
Three months after being placed into voluntary administration, self-managed super fund provider Dixon Advisory has had its Australian Financial Services (AFS) licence suspended by the corporate watchdog.
Announced today, the suspension is the latest turn for the E&P Financial Group (ASX: EP1, formerly known as Evans Dixon) subsidiary which first came under fire from the Australian Securities and Investment Commission (ASIC) for recommending clients invest in a property fund that then crashed in value.
Under the terms of suspension, Dixon Advisory’s AFS licence is permitted to operate until 9 May to give existing clients time to transfer to an alternate provider, and the company can seek a review of ASIC’s decision at the Administrative Appeals Tribunal.
The suspension comes after the firm was slogged with a $7.2 million penalty in July 2021, following mediation of proceedings brought by ASIC.
Those proceedings alleged Dixon failed to act in the best interests of clients who were recommended to invest in E&P's US Masters Residential Property Fund (URF) and URF-related products between 2 September 2015 and 31 May 2019.
At the beginning of that window the URF share price was trading at around $2.25, but a string of poor results led it to fall to around the $1 mark by the end of May 2019 and just $0.24 today.
ASIC alleged this recommendation equated to Dixon Advisory representatives failing to act in their clients' best interests to provide financial advice appropriate to the clients' circumstances.
Since then, Dixon Advisory appointed PwC partners Stephen Longley and Craig Crosbie as voluntary administrators after determining that mounting actual and potential liabilities meant the firm was likely to become insolvent.
Dixon Advisory cited liabilities including possible damages arising from class actions run by law firms Piper Alderman and Shine Lawyers as well as penalties agreed between the firm and ASIC.
E&P Financial Group says it is aiming to transfer Dixon Advisory clients to a replacement service provider of their choice, and propose a Deed of Company Arrangement (DOCA) to settle all claims against the subsidiary.
“The appointment of Voluntary Administrators to DASS has become necessary in light of the increasing number of claims against DASS and the potential associated financial liabilities,” EP1 managing director and CEO Peter Anderson said when administrators were appointed.
“It has also become apparent that settling individual claims as they arise will likely lead to inequities between client creditors. Voluntary administration provides an appropriate framework to ensure all client creditors are treated equitably.
“Importantly, no client assets are at risk as a result of this process, and we will strive to minimise any disruption to clients who will have ongoing access to their Adviser(s).”
Shares in EP1 are down 3.6 per cent to $0.66 per share at 10.23am AEST.
Get our daily business news
Sign up to our free email news updates.
)
)
)
)
)
