The Australian Securities and Investments Commission (ASIC) has issued a warning to licensees in the wake of the Dover license closure that they should ensure they have robust recruitment and monitoring procedures in place.
It said this was particularly the case when “appointing advisers who have worked for a licensee with a poor compliance history”.
The regulator’s warning was directed in part towards Dover clients, noting that the advice firm had advised ASIC it would cease providing financial services.
“As such, Dover clients might look for a new adviser,” it said. “These people should ensure the adviser is authorised by an Australian financial services (AFS) licensee. If someone wants financial advice and their ex-Dover adviser is not yet authorised by another AFS licensee, then the client should approach a new adviser.”
In guidance directly aimed at “ex-Dover advisers”, the regulator noted that “a person cannot give financial advice unless licensed or authorised by an AFS licensee”.
“ASIC understands Dover has revoked the advice authorisation of all its representatives. This means ex-Dover advisers cannot give new advice until authorised by another AFS licensee.”
Dealing with AFS licensees considering authorising ex-Dover clients, ASIC referenced its past warnings to AFS licensees “to ensure they have robust recruitment and monitoring when appointing advisers who have worked for a licensee with a poor compliance history”.
“ASIC notes any licensee considering authorising an ex-Dover adviser should:
- do background checks before authorising the adviser. 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;
- have arrangements to address deficiencies in the advice from ex-Dover advisers, and
- have heightened oversight (for instance, vet all advice from ex-Dover advisers for a period).”
