EXCLUSIVE Dover Financial director Terry McMaster claims that his collapsed business was fully compliant and argues that ASIC made no complaints about its client protection policy during a 2016 audit.
Speaking exclusively to ifa, Mr McMaster said that Dover was a “compliance-based, conflict-free AFSL, allowing advisers to run practices without institutional influence and with a completely open approved product list”.
“Dover did not accept institutional income, which meant it recommended industry funds over retail funds and index funds over retail managed funds, because these are obviously much better for clients. The institutions did not like this,” Mr McMaster told ifa.
In one of Dover’s professional indemnity (PI) insurance information documents from March 2018, it lists a qualified compliance team of 22 staff, including six solicitors and three responsible managers.
Mr McMaster said Dover requested an ASIC audit in February 2016 as part of its compliance process.
“The audit began in May 2016. Not 2017, as repeatedly stated by ASIC,” he explained.
“We formally asked for an interim report and undertook to act on all findings in November 2016 but were told ‘no’ by ASIC. We repeatedly asked for meetings throughout 2017 but again, we were repeatedly told ‘no’ by ASIC.”
According to Mr McMaster, Dover engaged five different law firms with experience in AFSL compliance to review its operations, including Holley Nethercote and imac legal in 2016; Sophie Grace in 2017; Integrity Compliance in 2018 and MLA Solicitors in 2018.
“These five law firms did not express concerns with the CPP,” Mr McMaster said. “In particular, Holley Nethercote and imac legal in particular reviewed the CPP in detail without raising concerns other than to conclude with the comment that the CPP ‘lacked probative value’.
“Dover voluntarily provided two expert legal/compliance reports to ASIC in 2017, each of which indicated there was no problem with the CPP. ASIC did not respond.
“But we now know ASIC internally dismissed both the reports as incompetent. ASIC didn’t tell Dover this. It would have been nice to know.”
Meanwhile, Dover has faced accusations that it employed rogue financial advisers who had been investigated by their former licensees.
In April, the Hayne royal commission heard that Dover engaged adviser Adam Palmer, who was being investigated by AMP-aligned dealer group Genesys Wealth Advisers when he joined Dover.
The royal commission also heard about former Dover adviser Andrew Smith. Prior to joining Dover, Mr Smith resigned from Westpac after he was found to be churning clients through fixed income products and asking his clients to sign blank documents.
But according to Mr McMaster, ASIC was happy with the conduct of these advisers during their time at Dover.
“ASIC approved both the Andrew Smith statements of advice and the Adam Palmer statements of advice,” he claims.
Mr McMaster’s comments follow ASIC’s decision this week to commence civil action against him and Dover. ASIC is seeking a declaration and penalties from Mr McMaster in relation to the company’s CPP.
More to come.
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