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Is the closing of Dover Financial Advisers checkmate to ASIC?

Dover Financial Advisers have long been known as a dealer of last resort for many an adviser who had left their previous AFSL under a cloud.

To take on planners who may have transgressed at their previous dealer group was probably a gutsy move and many have criticised Terry McMaster for this, while no doubt painting a large target on his back.

When I was asked about it and looked at it, I thought it was a hell of a way to build a book of clients as sometime in the next two, three or maybe five years ASIC will eventually catch up with those advisers and they'll no doubt be banned. The clients are then left within the Dover network.

Terry has always maintained that an adviser has a presumption of innocence until proved otherwise and gives them a haven to continue to operate and earn a living.

We heard during the Royal Commission that of those advisers he has taken on, Dover had no problems with their advice, with advice for all Dover advisers checked by lawyers before submission to the client.

While a lawyer may be able to sign off that the plan is compliant as it presents, in reviewing the advice you need to study the client questionnaire and file note and often it's the questions that weren't asked but should have been when considering the clients set of circumstances that can make a seemingly compliant Statement of Advice non-compliant, thereby bringing into question whether the best interest duty was followed.

From reports within the media it would seem to suggest that an ongoing ASIC investigation from 2017, along with the spotlight of the Royal Commission, is playing heavy into the decision.

From my interactions with ASIC, they move very slowly and client welfare is always at the forefront. The revelation that the client protection policy was essentially a protection for Dover for any liability from the acts of its authorised representatives - along with concern by FOS on the conduct of Dover during a client dispute - may have quickened ASIC's resolve to do something and do something now.

So, my thinking is the closing of the license is not ASIC's first choice and maybe a result of Dover not wanting to accept an Enforceable Undertaking. Enforceable Undertakings usually mean an appointment of an expert, a remediation program for clients and keeping ASIC continuously in the loop, in addition to it being a very costly exercise that ties up a lot of staff hours.

The timing of the announcement over a long weekend in most states of Australia makes me wonder whether ASIC thought it had Dover at 'Check' with either an Enforceable Undertaking or cancelling the license and Dover has given a very unexpected response: "We will hand in our license in 30 days."

Checkmate, ASIC!

*Steve Peters is compliance manager at QSuper and a former financial adviser. The views expressed in this article are the author's and do not represent the views of QSuper.

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