MenuFinancial Advice Association Australia (FAAA) CEO, Sarah Abood, has today called on Minister Stephen Jones to take action on the drastically escalating costs of the Compensation Scheme of Last Resort (CSLR).
An update from AFCA earlier this week noted a further 544 complaints about Dixon Advisory have been made since 15 February 2024, generating an estimated additional cost of approximately $65 million, that the financial advice profession will have to pay.
This equates to a direct cost to every financial adviser of $4,165 on top of what has already been disclosed by the CSLR. This is a huge impost for the financial advice profession that is already dealing with declining numbers and spiralling costs.
Abood said: “The Dixon Advisory AFCA membership has already been extended twice and the entity was put into administration over two years ago now. We urgently call upon the AFCA board to clarify the process and timing for that membership to end.
“We also urgently, again, call upon the government to review the funding model of the CSLR. Not only is it completely unfair, but it is also economically impossible, for the small business financial advice sector to underwrite the failures of large listed firms.
“Why should financial advisers pay for the failure of Dixon advisory, a subsidiary of the large listed group Evans and Partners, which earned over $174 million in revenue last financial year?
“They should not, and they cannot. It is not too much to say that this matter represents an existential threat to our profession. The Minister has not yet responded to our many requests for engagement on this matter, and we call upon him again to work with us urgently to find a sustainable solution to this crisis.”
