First an observation: Dover had the best SOA review processes of any AFSL

Dover is the only AFSL that checked every SOA three times before it was sent to the client.

There is no statutory obligation on an AFSL to check an adviser’s statement of advice before it is sent to the client. This was an obligation assumed by Dover. In February 2015 Dover did not check every statement of advice before it was sent to the client. Dover’s compliance team only checked “complex” SOAs, ie those involving debt, non-conservative investments, investments above $400,000, or large insurance premiums.

The process changed in late 2015. Dover started checking every SOA before it went to the client. We believe this meant close to 100% of SOAs were checked. This is because:

  1. every commission remittance was reconciled to a SOA. If there was no SOA the commission was not paid
  2. advisers who were detected not submitting SOAs for review were usually terminated and
  3. advisers were instructed Dover would not invoke its indemnity insurance if they did not submit the SOA for review. This was Dover’s “swim between the flags” rule.

Remarkably low client complaint rate in year ended 30 June 2019

In the year ended 30 June 2019 AFCA received more than 70,000 AFSL complaints. Based on the number of advisers Dover had at 29 June 2018 more than 1,300 of these complaints should have been Dover complaints.

After all the ASIC induced and press Dover got Dover still only received a handful of trivial complaints, and did not have to pay out any settlement amounts to any client.

That is, of course, because Dover had excellent advisers and excellent compliance processes. The idea that Dover had poor advisers and poor compliance processes is just another ASIC sponsored lie. You

An example of the false media statements published about Dover by ASIC

Speaking of ASIC sponsored lies, this is what ASIC wrote in a media release published on its website and distributed to the media on 12 June 2018.

Information for ex-Dover clients 

Dover has advised ASIC it will cease providing financial services.

As such, Dover clients might look for a new adviser. If you do that you should make sure you are dealing with an adviser authorised by an Australian financial services (AFS) licensee.

If you want to get financial advice and want to continue to use your ex-Dover adviser, you need to make sure they have been authorised by another AFS licensee.  If they have not been authorised or if for other reasons you want to change to a new adviser, you need to make sure that new adviser is authorised by an Australian financial services licensee.

You can read the medial release here: An ASIC media release falsely stating Dover had poor compliance.

ASIC FOI documents show Gervase Green, ASIC’s media manager, published and promulgated this media release deliberately to emphasise the false statements he and ASIC’s Tim Mullaly put out to the media on Saturday 9 June 2018. You can read about these false statements here: Gervase Green and Tim Mullaly mislead and deceive the media.

Despite this concentrated onslaught of intentionally false statements there were still virtually no complaints about Dover. (And obviously no complaints at all about the Client Protection Policy, but that’s another story.)

The most robust SOA review processes Holley Nethercote had seen

In 2013 Holley-Nethercote a well know AFSL compliance law firm, described Dover’s SOA review processes as “the most robust they had seen”. This was quite a compliment because they are the premier AFSL compliance law firm[1].

Dover’s emphasis on quality advice always in the client’s best interests and free of product creator influence, and multiple reviews by independent persons, manifested in an extremely low FOS complaint rate.

Dover had fewer than 10% of the FOS complaints of similar sized AFSLs. Terry McMaster and Florence Tee had no FOS complaints. It appears ASIC did not bother to check this critical fact until July 2018[2], as you can see from the e-mail dated 5 July 2018 pictured above.

Extensive due diligence by each of Deloitte and Holley-Nethercote during a planned sale of McMasters’ Accountants Solicitors and Financial Planners in 2015/16

In 2015 First State Super[3] (FSS) approached Terry with an offer to buy McMasters’ Accounting Solicitors and Financial Planning.

FFS was particularly interested in the financial planning practice. It put McMasters’ to a detailed and demanding due diligence[4]process.

Its review focused on Terry’s advice to doctors, dentists and other high net worth clients.

FSS used its own compliance staff. FSS also instructed consultants from Deloitte and Grant Holley from Holley Nethercote to take a deep dive into McMasters’ and Dover’s SOA preparation and review processes. The FSS audit was much more detailed than ASIC’s audit.

Dover and McMasters’ passed with flying colours. FSS offered to buy McMasters’ for $6m.

Extensive due diligence by Australian Super and PriceWaterhouseCoopers in 2013 and

In late 2013 Dover was subject to a detailed due diligence exercise by each of Australian Super and its consultant PricewaterhouseCoopers[5]. A second follow up review was completed by Australian Super in 2016/17. Its purpose was to confirm Dover’s advisers provided compliant and ethical advice to Australian Super members.

More extensive due diligence by Australian Super in 2016/17

In 2016 Australian Super was concerned Dover’s rapid growth was not matched by its compliance resources. It came back to make sure all was in order. Dover was its largest affiliate. Australian Super had a vested interest in Dover being competent to provide services to its 2,200,000 members. It spent more than a week at Dover’s office checking all was in order.

Australian Super was interested in “… appropriate compliance frameworks and oversight processes to ensure quality advice is provided to our members”.

Dover passed this review with flying colours too.

Annual review by AFSL compliance law firms.

Over the 3 y rs to 2017 Sophie Grace, Holley Nethercote and Integrity Compliance reviewed Dover’s compliance processes. They each reported all was in order at Dover.

 In-house review by expert compliance staff: detailed internal review of all SOAs

Dover employed 12 legally qualified Australian compliance staff, some were also solicitors, accountants or financial planners, and some were all three. They reviewed every SOA before it was sent to the client. The ratio of SOA compliance staff to advisers at June 2018 was 1:34, which is about three times the industry average.

Separate independent review of every SOA by MLA Lawyers

From mid-2016 on MLA Lawyers reviewed every Dover SOA for compliance with the best interests duty (section 961B(1), not section 961B(2)) and the appropriateness of advice rule[6].

This was a unique feature of Dover: literally every SOA was reviewed three times before it was sent to the client. Once in Dover’s Vietnam office. Once in Dover’s Australian Office and once by MLA Lawyers[7].

ASIC’s bad faith represents more misleading and deceptive conduct

Dover asked for the surveillance audit[12]. Dover  volunteered the 2016 Holley Nethercote report and the Sophie Grace report to ASIC in good faith. Dover wanted to show ASIC what it was doing to make sure it was as compliant as possible. Other AFSLs do the exact opposite.

ASIC repaid Dover’s good faith with bad faith.

The real question is why did ASIC not tell Dover?  Why did ASIC not respond to one of Dover’s many requests for feedback and its undertakings to rectify any compliance concerns?[13]

Why did ASIC not tell Dover what it had written in the ASIC Paper on 12 December 2016?