ASIC has commenced civil proceedings against an Evans Dixon advice subsidiary, for alleged conflicts around its US property fund and the provision of inappropriate advice.
The regulator commenced civil penalty proceedings against Dixon Advisory and Superannuation Services in the Federal Court on Friday, alleging breaches of certain best interests obligations of the Corporations Act between 2 September 2015 and 31 May 2019.
ASIC has claimed that Dixon Advisory representatives knew or ought to have known that there was a conflict between their clients’ interests and the interests of entities associated within the Evans Dixon group. ASIC reported they had failed to give priority to the clients’ interests and provided advice that was inappropriate for clients’ circumstances.
The action relates to advice given to eight sample clients, who were advised to invest in the ASX-listed US Masters Residential Property Fund (URF) and URF-related products between 2 September 2015 and 31 May 2019.
The URF was established by Dixon Advisory in 2011 to give investors exposure to the US residential property market, by investing in residential property in the New York metropolitan area. ASIC reported it paid substantial fees to several companies owned by Evans Dixon, including Dixon Advisory.
ASIC has also alleged that a total of 51 separate instances of financial advice were provided to the eight sample clients in the relevant period, each of which resulted in two or more contraventions of “best interests duties” under the Corporations Act – in total, 126 contraventions.
The corporate watchdog is seeking declarations of contraventions and pecuniary penalties against Dixon Advisory.
The maximum civil penalty for contraventions alleged against Dixon Advisory is $1 million per contravention for contraventions prior to 13 March 2019, and $10.5 million per contravention after that date.
ASIC is also seeking orders that Dixon Advisory:
a) put in place appropriate systems, policies and procedures to ensure that Dixon Advisory representatives comply with best interests’ obligations; and
b) provide a written report from an independent expert confirming this compliance.
Evans Dixon has indicated Dixon Advisory will be defending against the proceedings, stating “in due course [it] will file a comprehensive defence after it has received and had a reasonable opportunity to review ASIC’s detailed statement of claim”.
The group on Friday morning stated it expects to receive the final form of the concise statement, followed by a more detailed statement of claim in the coming weeks.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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