The Association of Financial Advisers will lobby ASIC and the Federal Government to extend the transition period provided to Dover Financial Advisers' authorised representatives in the wake of the dealer group's shock closure.
On Friday evening it was revealed Dover would be shutting down, prohibiting about 400 authorised representatives from providing any new advice to clients and giving advisers less than 30 days to make transitional arrangements before the dealer group's AFSL is cancelled by ASIC on 6 July 2018.
According to Rainmaker data, Dover is the second largest non-institutionally aligned dealer group in Australia representing about $3 billion in funds under advice. The closure is expected to affect more than 250 small businesses.
Labelling the demise of Dover as tragic, AFA chief executive Phil Kewin said the association is doing all that it can to provide assistance to members under Dover's AFSL - about 40 in total.
"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.
"We're also trying to contact [Minister for Revenue and Financial Services] Kelly O'Dwyer's office to see if that's a possibility as well because we can't underestimate the scale of this in terms of the thousands of clients who are now not receiving the quality advice that they deserve."
In a brief statement, ASIC confirmed that Dover's closure is the result of an ongoing investigation commenced in 2017, under which Dover was made aware that the regulator "was minded to suspend or cancel Dover's AFSL."
A spokesperson for ASIC said: "The matter has not gone to hearing but as a result of this notice, Dover and Mr [Terry] McMaster have advised that, amongst other things, Dover will cease providing financial services."
In this context, and that of Dover chief executive Terry McMaster's appearance at the Royal Commission in April, the AFA acknowledged that efforts to facilitate meetings between its licensee partners and affected advisers may provide little additional help given the more stringent, potentially drawn-out due diligence processes required.
"Unfortunately these advisers are caught up in something that, in the main, is completely out of their control. However, as it has followed on from the Royal Commission - not to mention the coverage that it has received - it will make it that much harder," he said.
Despite knowing that Dover had been under investigation by the regulator for some time, Kewin said news of its closure still came as a surprise to the industry.
"Obviously this is a shock and has taken everybody by surprise. ASIC has made it quite clear that they've been investigating Dover, but ultimately we don't know what conversations took place between Terry McMaster and the regulator last week to see it end up like this," Kewin said.
Lifespan Financial Planning chief executive Eugene Ardino confirmed Lifespan is already in talks with several Dover practices, reinforcing that any offer of authorisation would be on the merit of each individual adviser.
"We have had a general uptick in approaches from advice practices for our licensee services in recent months. Lifespan has been increasing its resources to meet this increased demand and, as such, we are well positioned to take on new practices, however, we maintain a rigorous due diligence and on-boarding process. It is definitely not 'a growth at any cost strategy'," Ardino said.
While not wishing to speculate without all the facts, Ardino said the news should cause all advisers to think long and hard about who they choose to partner with for the provision of licensee services.
"It's difficult to really comment, other than to say this puts even more pressure on an industry where the integrity of some segments of the market have been repeatedly called into question...Even if you run a stable, high quality and compliant advice business, if your licensee closes it can be painful," he said.
Elsewhere, Hamilton Blackstone Lawyers is already investigating the possibility of a class action against Dover on behalf of affected authorised representatives, with managing director Christean Yazbeck inviting advisers to get in touch.
"In view of several adverse findings against Dover at the Royal Commission, it is likely that affected advisers may be entitled to relief," he wrote on LinkedIn.