ASIC issues warning over Dover advisers

Advice licensees considering onboarding ex-Dover Financial Advisers' authorised representatives have been warned to ramp up due diligence processes by the corporate regulator.

As the fallout from Dover's shock closure continues, ASIC has reinforced guidance to licensees on ensuring they have robust recruitment and monitoring practices, particularly when appointing advisers from an AFSL with a poor compliance history.

In doing so, the regulator referenced previous warnings issued following action taken against Aliom Pty Ltd and the now-defunct Guardian Advice, in 2013 and 2015 respectively.

Above all, ASIC urged licensees considering authorising an ex-Dover adviser to undertake detailed background checks.

"When hiring a new adviser ASIC suggests that, at a minimum, licensees receive audit reports and/or reference checks from the previous licensee. 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," ASIC said.

The regulator also advised licensees have arrangements to address deficiencies in advice provided by ex-Dover advisers and ensure heightened oversight, such as scrutinising all advice provided by the adviser for a period of time.

However, Dover advisers were given less than 30 days' notice that their authorisation would be cancelled on 6 July 2018 - a period for action made shorter by a long weekend across most of Australia.

Yesterday Association of Financial Advisers chief executive Phil Kewin admonished the month-long transition period afforded to Dover advisers, saying it was unrealistic and thwart with difficulty.

"The ability to respond to this appropriately in just one month is going to be near impossible... We've contacted ASIC to find out more information and to see if there's any opportunity to provide some sort of extension because one month is virtually unworkable," he said.

"Some of these advisers have only recently moved to Dover, so it's a really unfortunate situation...I don't really care whose fault it is, we shouldn't be in this position. But, now that we are, we should make as much effort as possible to make sure that we deal with it in an appropriate timeframe, in the best interests of clients and the advisers."

For any Dover advisers looking to self-license in the wake of the dealer groups sudden demise, Kewin warned against rushing into such a decision. He said anecdotally the current wait time on that process is about five months.

"To be honest, that's only something that should be done if it is going to suit the individual; it shouldn't be done as a kneejerk reaction. Although, I'm sure many Dover advisers are probably quite attracted to the idea of being in control of their own destiny at this point," he said.

Kewin said the AFA is in contact with ASIC in regards to extending the transition period and is also trying to contact Minister for Revenue and Financial Services Kelly O'Dwyer to discuss the potential for greater leniency.

Read more: DoverASICDover Financial AdvisersPhil KewinGuardian AdviceAFAKelly O'DwyerAssociation of Financial Advisers
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