Appendix 5

Dear Louise / Peter

I used to work for Dover Financial Advisers and I was hoping you could help me understand why I lost my job. I’m 50 years old with a mortgage and anticipate having difficulty finding another job. Having to sell my property has become a very real possibility and it is something I will have to plan for over the coming months. Since Terry appeared at the Royal Commission, the past five months have been a slow‐moving nightmare. I have watched a once vibrant, positive workplace disintegrate around me. One by one my colleagues have lost their jobs.  Over the past five months I have barely had a decent night’s sleep which has had an adverse affected on my health.

I’m genuinely confused as to why it was necessary to force Dover to shut down. Perhaps you can help me understand? I have been following the Royal Commission closely and have watched as examples of criminal behaviour and non‐compliance have flourished at the banks. Clients have suffered hundreds of millions of dollars in losses. In contrast, we are yet to find a client of Dover who suffered any financial loss. Please correct me if I am wrong.

You shut down Dover on the basis of “misleading information” in our client protection policy. But you had our client protection policy in your possession for over two years and never raised any concerns with us? To those of us who have lost our jobs, this is the cause of immense frustration and anger. As Terry said, all it would have taken was a phone call back in 2016, and the issue would have been rectified immediately. Cooperating with ASIC was always a priority of ours. Why would anyone not cooperate with ASIC? When you’re trying to operate a compliant business, why would you deliberately get on the wrong side of the regulator? It makes no sense, unless of course you are a bank. The Royal Commission has showed many examples where banks went out of their way to avoid cooperating with ASIC.

In a bid to improve our systems we even invited you (ASIC) down to our office for a voluntary audit. I remember the day clearly. I was the person who got up from my desk and opened the door for your staff! The audit took place in 2016 and in the months which followed we asked for an interim report on several occasions. The request came with an undertaking that “all findings would be acted upon”. However, you repeatedly told us ‘no’. Unfortunately the first we heard that ASIC had an issue with our client protection policy was a couple of weeks before the Royal Commission started. Again, this has been the source of incredible frustration and I believe you owe us an explanation.

In relation to our client protection policy, upon finally hearing of ASICs concerns, we begun remediating the situation immediately (full cooperation), this included writing to approximately 15,000 affected clients. This all happened in March. In the months following (despite all of the negative publicity surrounding Dover) we have yet had a client come forward and complain, let alone anyone report any kind of financial loss. How could you use this as justification to shut down our business?  If it gets to the stage where I have to sell my property, I will be incredibly upset.

Something which made Dover unique was the fact that we had no conflicts of interest. Dover did not accept institutional income, we had an open APL and our advisers did not have to meet sales targets. They were certainly not allowed to flog underperforming financial products to unsuspecting clients (compare this to the hopelessly conflicted culture at the banks). At Dover, clients were more likely to be told to remain in their low‐fee industry superfund. Clients interested in investing in the stock market would be channelled into index funds instead of retail managed funds. Again, a low cost safe option which was great for clients.

Another thing which made Dover unique was the level of supervision we offered our advisers. Dover advisers had to submit every single statement of advice to us first before it could be sent to the client. Standard practice dictated that every statement of advice underwent three levels of checking before it could be released to the client. The final level of checking saw the advice being signed off by an independent law firm (MLA Lawyers). This had the benefit of accessing MLAs PI insurance with unlimited run‐off cover should anything go wrong. If there was another AFSL with this level of supervision, then I haven’t heard of them. Certainly not the banks. I always looked upon this level of supervision as being something positive and there was a sense of pride in working for a company where compliance was valued so highly.

For some reason, our SOA auditing policy was always treated with scepticism by ASIC, and there was nothing we could do to change your view. Trust me, I had to pick up the phone on numerous occasions from frustrated advisers chasing up their SOAs. It was nothing for an SOA to take one to two weeks to progress through our audit/checking process. Let me give you an example… An SOA would be submitted to Dover by an adviser, changes would be requested, the SOA would be resubmitted, more changes requested, advice resubmitted etc until finally the SOA was given the green light by our compliance team. The whole process could take a week, to ten days or longer. If only the banks applied this level of supervision to checking their adviser SOAs.

Michael Wright from BT Financial admitted to accepting a 25% advice failure rate. Even ASIC admits that 80% of bank financial advice is not in their clients best interest and 10% of bank SOAs actually damage their client. At Dover, we endeavoured to make every SOA have a 100% compliance rate. Failure was simply not acceptable. Any advice which did not meet the ‘best interest’ test was weeded out before it could be sent to the client. I guess that’s why we are yet to have a client come forward claiming to have lost money. Again, please let me know if this is not the case.  The policy at Dover was simple, every single SOA had to be compliant and in the clients’ best interest. No exceptions.  To this end  we invested money in the systems to make this happen. Twenty five full‐time qualified legal staff in our Melbourne office before it was shut down.  All this to no avail. Frustrating!! Dover gets obliterated whilst it’s business as usual at the banks. I cannot understand how you can justify this and I would like an explanation.

Over the last 18 months of operation, 130 advisers left the banks and joined Dover. With no one selling their underperforming financial products, it’s fairly obvious who was losing money.

Once again Louise/Peter, if you are able to identify a single client of Dover who has suffered any kind of loss, please let me know. At least it will help me sleep better at night knowing we were shut down for a valid reason. Please don’t claim that Dover was shut down on the basis of our client protection policy. I’m sorry, it just doesn’t stack up. In the meantime we will look on with interest as the banks continue reimbursing money to clients who have suffered financial loss…. Reimbursing clients was something we never had to worry about at Dover.

It would be interesting to hear your thoughts. I would also be happy to catch up for a coffee anytime.

Thank you

Kind Regards,

Jonathon Hayward









The Dover Group