At the busiest time of the tax year, a number of accounting firms will be adversely impacted by the shock closure of licensee Dover Financial Advisers, including its sister company McMasters.
Lawyer and financial services executive Terry McMaster wrote to authorised representatives of his Dover licensee business last week, announcing the cancellation of its AFSL following the intervention of ASIC.
According to the email, obtained by My Business’ sister title ifa, the group’s 400-plus advisers are unable to provide new advice effective immediately on 8 June, with the licence to be officially wound up by 6 July.
The decision will have major implications for a number of accountants who are authorised to provide limited or full-service advice under Dover’s AFSL and will now be seeking to urgently move to new licensing arrangements in order to continue trading.
One of those authorised representatives is McMasters Accountants and Advisers, a multistate boutique firm specialising in providing tax, financial and legal advice to medical professionals.
The firm boasts more than 1,200 SMSF trustee clients, according to its website, and is owned by its namesake, Mr McMaster, who is also managing director of Dover.
The letter does not offer the reasons for ASIC’s demands, but does indicate that the intervention may be related to evidence provided by Mr McMaster to the royal commission.
“As you know, our business has been under substantial public scrutiny in recent months,” he said.
“If the last six weeks have shown us anything, it is that it is easy for statements to be interpreted in ways other than how we expect.”
The letter concludes that the mission to provide a “direct, unconflicted model” for financial advice became “impossible”.
Mr McMaster was hospitalised after collapsing during tense cross-examination by counsel assisting the royal commission Mark Costello QC.
During proceedings, Mr Costello described Dover’s so-called client liability scheme as “Orwellian”.
The letter also confirms that Dover’s staff will be “discontinuing their employment with us in the near future” and demonstrates regret for the timeframe and “impersonal” medium of the announcement.
“We very much apologise for the short notice,” it said.
“The above was only agreed in the last 72 hours.”
ASIC later clarified the regulator’s role in the shock development.
In a statement, an ASIC spokesperson confirmed that an official investigation has been underway, but indicated that ultimate responsibility for the closure rests with Dover's leadership.
“As part of an ongoing investigation commenced in 2017, ASIC served a notice of hearing on Dover that ASIC was minded to suspend or cancel Dover’s AFSL,” the statement said.
“As a result of this notice, Dover [and] Mr McMaster have advised that, amongst other things, Dover will cease providing financial services.”
“At this stage ASIC does not intend to comment further. ASIC’s investigation is continuing.”
A number of dealer groups have come forward specifically targeting Dover advisers to join their network in recent days, including Aon Hewitt and First Mutual Australia, according to leaked emails seen by another of My Business’ sister titles, Accountants Daily.
Some authorised representatives are considering legal action against their licensee for the potential damages and client impact emanating from Dover’s demise, the emails reveal.
Mr McMaster declined requests for an interview.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.