ASIC Issues Warning for Dover Advisers, Clients

ASIC has issued a reminder to Dover clients that their advisers are not able to provide advice until authorised by a new licensee, and for licensees to closely vet any former Dover adviser before bring them on-board.

The corporate regulator released the information, via its website, where it suggested financial advisory groups keep in mind ASIC’s previous warnings for “…licensees to ensure they have robust recruitment and monitoring when appointing advisers who have worked for a licensee with a poor compliance history”.

Specifically, ASIC stated “…any licensee considering authorising an ex-Dover adviser should:

  • do background checks before authorising the adviser
  • have arrangements to address deficiencies in the advice from ex-Dover advisers
  • have heightened oversight (for instance, vet all advice from ex-Dover advisers for a period)”.

ASIC suggested that when hiring a new adviser, licensees should, at a minimum, receive audit reports and/or reference checks from the previous licensee, and added, “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”.

In a note directed to clients of former Dover advisers, ASIC pointed out that since the business will cease providing financial services the clients might consider looking for a new adviser, emphasising this would be a necessity if their current adviser cannot be authorised by another advice group.

“If you want to get financial advice and want to continue to use your ex-Dover adviser, you need to make sure they have been authorised by another AFS licensee,” ASIC explained.

“If they have not been authorised or if for other reasons you want to change to a new adviser, you need to make sure that new adviser is authorised by an Australian financial services licensee.”

ASIC also reminded former Dover advisers they were unable to give unless they were authorised to do so, repeating a warning issued by Dover Principal and Owner, Terry McMaster in his note to advisers late last week informing them of the shut down of the business (see: Dover Financial Advisers to Close in One Month).

In the note, McMaster said advisers who continued to provide advice after 8 June under Dover would be in direct contradiction of ASIC’s requirements regarding the cessation of advice as well as being in breach of their contract with Dover.

“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.