The Australian Securities and Investments Commission (ASIC) has issued a warning to all licensees that may seek to authorise ex-Dover advisers after it announced on Friday the financial advice firm will shut down.
In releasing guidance for licensees considering authorising ex-Dover advisers, ASIC warned they should conduct background checks before authorising an adviser.
“When hiring a new adviser, ASIC suggests that, at a minimum, licensees receive audit reports and/or reference checks from the previous licensee. In the case of ex-Dover advisers, you should get audit reports and/or a reference from the licensee before Dover and/or do other assessments of the person’s competence,” the corporate watchdog said.
It also said licensees should have arrangements to tackle deficiencies in the advice from ex-Dover advisers and increase oversight, such as vetting all advice from ex-Dover advisers for some time.
“In the past, ASIC has warned AFS (Australian financial services) licensees to ensure they have robust recruitment and monitoring when appointing advisers who have worked for a licensee with a poor compliance history,” it said.
ASIC has advised ex-Dover clients they should look for a new adviser, but to ensure they are authorised by an AFS licensee.
Dover Financial Advisers announced last Friday it will cease to operate under an Australian financial services licence (AFSL) after reaching an agreement with the corporate regulator.
In an email to over 400 financial advisers who worked at Dover, owner Terry McMaster said the agreement was reached 72 hours before the email was sent.
“We very much apologise for the short notice,” McMaster wrote.
“The above was only agreed in the last 72 hours. Various aspects of the agreement, including the time of year and the speed of the closure, were entirely outside of our control. We tried, but have not been able to give you more time than this.”
The move follows an appearance by McMaster at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services industry, where he collapsed during his testimony.
McMaster told advisers their authority to represent Dover will cease on or before 6 July.
Between now and the time their termination becomes final, advisers cannot provide any new advice to clients. They can only implement the advice clients already agreed to on or before 8 June.
“Any such advice or service will be in direct contradiction of ASIC’s requirements. It will also breach your contract with us. Through both of these mechanisms, you will be liable for any damages that arise as a result of any new advice or service provided after today,” McMaster said.
“As you can imagine, ASIC are watching the way that we wind the AFSL down very closely.”
An ASIC spokesperson said of the collapse: “As part of an ongoing ASIC investigation commenced in 2017, ASIC served a notice of hearing on Dover that ASIC was minded to suspend or cancel Dover’s AFSL.”
ASIC said in a statement the matter has not gone to hearing.
