We demonstrate here collective and non-collective dielectric relaxation processes of nickel nanoparticles dispersed ferroelectric liquid crystal in a wide frequency range (20Hz–5MHz). A high frequency relaxation mode in conjunction with the collective dielectric mode was induced in ferroelectric liquid crystal-Ni dispersions. This relaxation mode persists even in the Sm A phase of the material. Occurrence of additional relaxation mode has been examined in the light of magnetic dipole and exchange interactions among the dispersed nanoparticles. In lower concentrations of nanoparticles, the effect is believed to originate from magnetic dipole interactions; however, in higher concentrations, exchange interactions dominate over the superparamagnetic relaxation that leads to strong dielectric absorption. Further, temperature and concentration dependence of relaxation frequency and amplitude of induced mode also indicated that the process must be driven by strong interparticle interactions of exchange type. Secondly, coupling of ferromagnetic nanoparticles with ferroelectric liquid crystal (FLC) molecules also serves to influence the LC director orientation and affect the order parameter of FLC-Ni NPs dispersions. In addition to this, temperature dependence of response time in FLC-Ni mixtures showed significant improvement, which has been attributed to a combined effect of decreased rotational viscosity and slightly increased spontaneous polarisation.