June 19, 2018
The rapid closure of Dover Financial Advisers has highlighted how the current financial advice licensing regime favours institutions ahead of advisers and clients, an industry consultant has claimed.
Responding to recent news that Dover would close in under a month (see: Dover Financial Advisers to Close in One Month), Connect FSB Chief Executive, Paul Tynan claimed there were flaws in the licensing regime and questioned the hurdles being placed in front of Dover advisers seeking new licensees.
Tynan said that alongside being unable to provide service to existing clients, Dover advisers also had “…an almost impossible task of finding a new AFSL within a three-week timeframe”.
He claimed that unpaid remuneration from product manufacturers may not be released to advisers with some manufacturers confirming they were not passing on any revenue to Dover advisers at this time.
“As if this situation and time-frame wasn’t bad enough and things couldn’t deteriorate any further, ASIC has warned potential AFSL’s that they must be diligent in processing any ex-Dover advisers – further hindering their endeavours,” Tynan said.
“Is it any wonder then that several institutional dealer groups have said they will not licence or allow their advisers to buy any ex-Dover businesses,” he added.
“What did Dover advisers do wrong that warrants this appalling retribution…”
Tynan questioned the treatment of Dover advisers and said the larger issue was the many people who had lost access to financial advice since the announcement of the closure on 8 June.
“What did Dover advisers do wrong that warrants this appalling retribution when they are forced to work within a licensing framework that is biased against both the adviser and their clients?” Tynan said, adding many advisers still had financial commitments despite having no income stream at present.
“Who cares about the well-being of thousands of clients, their families and businesses who have lost their advice partner because of the financial advisory sector’s licencing system? Let alone 400 advisers and their staff who have effectively become unemployed,” he added.
Tynan was also critical of the heads of larger licensees and their muted response to the news of Dover’s closure claiming it highlighted the silo mentality that exists within the financial advice sector.
“The most damning outcome of this fortress mentality by the industry’s institutions, key stakeholders and regulatory bodies is that their response has been to focus on self-interest which is not aligned to or reflects the best interest needs of the consumer,” Tynan said.
“If consumer confidence is to be restored, the entire advice community together with ASIC must work together to support and transition the 400 ex-Dover advisers to new AFSLs.”