The corporate regulator has clarified that it has been investigating Dover Financial Advisers, but ultimately said closure of the dealer group rested with its executives.
On Friday, Dover director Terry McMaster wrote to authorised representatives informing them that the company’s AFSL will be cancelled on 6 July and that they must cease providing new advice immediately.
While his email provided scant information about the reasons for the cancellation, Mr McMaster referenced an ASIC “negotiation” and “agreement”, seeming to suggest that the shock closure was a result of direct orders from the corporate regulator.
However, in a statement to InvestorDaily, an ASIC spokesperson has clarified the regulator’s role in the development — which has seen hundreds of financial advisers urgently seeking new licensing arrangements.
“As part of an ongoing investigation commenced in 2017, ASIC served a notice of hearing on Dover that ASIC was minded to suspend or cancel Dover’s AFSL,” the statement said.
“As a result of this notice, Dover [and] Mr McMaster have advised that, amongst other things, Dover will cease providing financial services.”
“At this stage ASIC does not intend to comment further. ASIC’s investigation is continuing.”
A number of dealer groups have come forward specifically targeting Dover advisers to join their network in recent days, including Aon Hewitt and First Mutual Australia, according to leaked emails seen by InvestorDaily.
Some authorised representatives are considering legal action against their licensee for the potential damages and client impact emanating from Dover’s demise, the emails reveal.
Mr McMaster has declined requests for an interview.
Update: ASIC released a document yesterday with information for ex-Dover clients, ex-Dover advisers and licensees considering authorising ex-Dover advisers.
In the note, ASIC described Dover as "a licensee with a poor compliance history" and suggested that Dover clients "might look for a new adviser".
"If you do that you should make sure you are dealing with an adviser authorised by an Australian financial services licensee," said ASIC.
ASIC also cautioned licensees considering authorising ex-Dover advisers to do background checks including, at a minimum, audit reports and reference checks.
"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," said ASIC.
Licensees taking on ex-Dover advisers should also "have arrangements to address deficiencies in the advice from ex-Dover advisers" and "have heightened oversight (for instance, vet all advice from ex-Dover advisers for a period)", said ASIC.
In response to questions from InvestorDaily, ASIC confirmed it intended to cancel Dover's licence before Mr McMaster took matters into his own hands on Friday.
InvestorDaily understands there were a number of compliance issues at Dover that are still under investigation by ASIC.
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