Who proactively asks their software stack providers about security?
The results are in from ASIC's Cyber Pulse Survey, and the report has been released (12th November 2023). So much to unpack! One of the points they make is around supply chain risk. Without looking at the survey, I'm interested to know your thoughts on the percentage of advice firms that have already asked their software stack providers about the levels of security they have in place and can provide the evidence to show they did their DD. What percentage do you think have this on file?CSLR and the cost of Dixon Advisory
This week has seen a big focus on the CSLR, and particularly the cost to the financial advice profession - $18.6m in 2024/25. The underlying story is the issue of the Dixon Advisory business. At last count, there were 1,948 Dixon Advisory complaints sitting with AFCA. To put this into perspective, AFCA received just 600 advice complaints in the entire 2021/22 year across all entities and less than 500 (excluding Dixon Advisory) in the 2022/23 year. The 10 largest financial institutions in Australia need to pay for the complaints received up to 7 September 2022 (a total of $241m), and the Government and the advice profession share the cost of the remaining 310 cases. And when I say share, I should be clear, the Actuaries appointed by the CSLR suggest that the Government will pay 1 of these matters and the profession the rest. How unfair is that? That is another story! This actuarial firm have suggested that 95% of the Dixon Advisory complaints are likely to receive a payment from the CSLR. That is a remarkably high percentage, which draws me to the evidence in the first AFCA Dixon Advisory case. The table on page 7 of this determination illustrates the percentage of related party products held by this client (between 54% and 74%). That is an incredibly high percentage. This case rests upon the issues of compliance with the BID and the client priority rule. Who would believe that it was possible to comply with the obligation to prioritise the interests of the client, when you are recommending such a high allocation to related party products? No one can have products that were that good, and the associates of Dixon Advisory certainly were not. That is why we have this CSLR mess. This brings me to my second point; should small business financial advisers be covering the cost of the CSLR when the problem was caused by the performance of the products of a related entity? Is that entirely or even predominantly an advice problem? I welcome your thoughts on all of this.QAR: does the first tranche cut it?
One notable omission from Treasury's draft QAR legislation is optional SOAs, which were originally going to be part of the first "stream" of reforms when the Government first responded to the review back in June. What do you think of the plan as it currently stands? The changes to fee consent, FSGs and advice in super are still included. How important to you (and your clients) was the SOA proposal?What did the Government do to understand the cost of the CSLR?
The advice profession has every reason to be furious about the handling of the CSLR legislation. My latest article sets out one more reason why that is the case. The Government is required, when introducing legislation, to undertake an Impact Analysis, in order to understand the consequences of the legislation, including the benefits and costs. In the case of the CSLR, an Impact Analysis was not done. The Government relied upon the Hayne Royal Commission, as being an equivalent exercise, however the Hayne Royal Commission final report was four years before the CSLR legislation was tabled, and three years before Dixon Advisory went into administration. We nonetheless expected that the Government would have undertaken analysis to understand the likely cost. Despite the obligation to undertaken this analysis and to publish it on the Office of Impact Analysis website, that was not the case. Even when investigated through the Freedom of Information process, despite extensive delays that took it well beyond the legislated timeframe, we got very little information back. There is no doubt that the Government knew the scale of the Dixon Advisory debacle, however evidently did not do the work to understand the likely cost for the small business financial advice sector. That compounds the problem that we have with this legislation that is both inequitable and unsustainable. The Government needs to fix this. Read my latest article here and let me know your thoughts down below.
