More Fallout From Aussie Royal Commission


Turmoil in the Australian financial advice sector continues, with news over the weekend that a top-ten advice licensee has closed its doors.

Non-aligned financial advice group, Dover Financial Advisers, told its firm of almost 400 advisers their authority to act as authorised representatives had been withdrawn immediately and the group would cancel its licence.

Dover Financial Advisers principal and owner, Terry McMaster

In a note sent to its advisers, Dover Financial Advisers principal and owner, Terry McMaster apologised for the short notice and said the decision to close the business was the result of an agreement reached with regulator, ASIC, in the previous 72 hours.

The regulator, however, has since issued a statement to the effect that, while it had been investigating the advice group licensee, it had not initiated Dover’s shutdown (see: Dover Shutdown Not Initiated by ASIC).

No specific reasons for the shutdown were provided by McMaster, who claimed the group had been under scrutiny for the past few months, and this would continue during the shutdown.

McMaster was recently invited to appear at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, where he was questioned about the Dover Client Protection Policy, which was part of its Australian Financial Services Guides and its mandated Statements of Advice.

At the hearing in late April, Counsel Assisting the Commission, Mark Costello labelled the Protection Policy as “…nothing more than an elaborate attempt to exclude Dover’s liability for the acts of its authorised representatives”.

An ASIC Notice addressed to Dover clients from 13 April 2018, available on the group’s website, addressed concerns around the use of the Policy and stated, “On 22 March 2018 Dover was notified by ASIC that it had reviewed the Dover Client Protection Policy and believed it contained certain provisions which were unlawful and void”.

The notice continued, “The Protection Policy was deceptive because it contained certain provisions the effect of which were to avoid liability to compensate clients for any loss resulting from the advice provided” adding that Dover would not rely on those clauses in a dispute as they were “…unlawful and are voided by the financial services law and the general law”.

Dover stated it had immediately withdrawn the Protection Policy, replaced it with a new retrospective information policy and had written to each client potentially affected by the provisions of the Protection Policy.

McMaster said Dover would assist advisers to transition to new licensing arrangements, but could not provide specific help on which licensee they should join.

According to ASIC records, Dover had 393 advisers as at 1 June 2018.