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FAAA slams ‘almighty go-slow’ on CSLR/Dixons inquiry
The Financial Advice Association has urged the government’s advisory body to speed up work on its scheduled inquiry into the Dixons Advisory scandal and associated cost blowouts in the Compensation Scheme of Last Resort.
Last year Treasury announced that an inquiry and report into the CSLR and “challenges to its ongoing sustainability”, with particular reference to the Dixon Advisory collapse, would be handed in by the Economics References Committee by the last sitting day of March.
The deadline for submissions to the inquiry were due on February 1, yet the Committee hasn’t called for witnesses who will appear at inquiry and answer questions in front of parliamentary committee members. With less than a month before the report is due, the FAAA fears the inquiry will be delayed in the same way that the Delivering Better Financial Outcomes reform has fallen behind.
The need for a deep dive into the CSLR’s flawed design and what went wrong with Dixons were made clear last week when the scheme announced a Dixons-fuelled $70 million dollar compensation bill for the financial advice industry. While the bill is capped at $20 million, the pecuniary impost on individual advisers is significant, especially when paired with record adviser levies being imposed by ASIC.
At any rate, said FAAA chief executive Sarah Abood, the CSLR’s announcement of the bill should not slow down the progress of the inquiry. If anything, it just highlights the need for quicker action.
“The events of last week should not be an excuse to delay the Senate inquiry in Dixon Advisory,” Abood stated in a press release. “We have continued to unearth problems not only at Dixon Advisory but also at other firms where a variety of problems have arisen.”
All the pieces required to move forward with the inquiry should be in place, Abood argued, meaning there should be no further reason for delay.
“The case had been made for the critical importance of this inquiry, and stakeholders have provided multiple submissions. There is much that still needs to be investigated. Senators Bragg and Walsh should call witnesses for this inquiry immediately.”
After the delays getting the DBFO reforms through the legislative process, the FAAA says advisers could be forgiven for interpreting the CSLR inquiry delay as an indication that the advice industry isn’t a priority.
“Advisers are rightly angry that it now appears as though there is a continued effort to not delve into these issues, and to avoid a genuine investigation of where this has all gone wrong,” she said. “It is particularly critical to progress with this investigation now, in light of the estimates that the financial advice profession could end up paying an additional $50 million for CSLR next financial year, on top of the $20 million sector cap.
“If anyone is in any doubt that there are problems with the way that the CSLR has been designed, and the potential implications emanating from not just Dixon Advisory but other firms, then they need only to read the submissions that have already been made.”
Last week Treasury also announced it would conduct a separate post-implementation review into the CSLR, which the Financial Services Council called “unsustainable in its current form”.
