Dover reveals plans for ‘orphan’ clients

Dover, which announced its closure on Friday, 8 June as reported by ifa, will cease to license its authorised representatives from the close of business today.

ifa understands that the majority of Dover's 400 advisers have already made arrangements to become licensed by other groups.

But a small minority of Dover advisers – typically, but not limited to, those who have been travelling overseas in the past month – are facing the prospect of having their clients 'orphaned' after 6 July.

An 'orphaned' client is a client that is not owned by a licensee. Insurance companies will not pay commissions for orphaned clients, which has ramifications for both Dover advisers and Dover itself (which is owed licensing fees).

To get around the problem, Dover has entered into an agreement with Charter Financial Planning (AMP) practice Enva.

In an email seen by ifa, Dover said that advisers who remain authorised representatives of its dealer group on 6 July will have any clients for whom there are ongoing payment arrangements transferred to Enva.

Enva managing director and principal financial adviser Michael Baragwanath confirmed the agreement to ifa.

Mr Baragwanath said remaining Dover advisers have been presented with two options.

Under option one, which is Dover’s default option, Enva will hold the clients for a few months until the adviser finds a permanent licensee.

During the transition, Enva will service the clients on the Dover adviser's behalf, Mr Baragwanath said.

Under option two, which is aimed at Dover advisers looking to exit the industry, Enva will enter into an arrangement to buy the clients, he said.

Mr Baragwanath stressed that Enva is not seeking to authorise any former Dover advisers.

"We will look after their clients for them short-term until they find a solution. We're not offering to authorise advisers since we are not in a position to do so," he said.

In its email to advisers, Dover said Enva will collect any ongoing payments and retain a fee of 30 per cent for doing so.

“If there remains outstanding debt to Dover, Enva will pass on the balance of client payments to us and it will be used to reduce the amount owed,” said the Dover email.

“If there is no outstanding debt to Dover, or once any outstanding debt has been repaid, Enva will pass on this balance to you.”

The Dover email emphasised that under the arrangement advisers would not be authorised by Enva, nor would they be able to write or implement advice.

“Enva agree to transfer your clients to another AFSL if and when you establish alternative arrangements for yourself and providing that your debt to Dover has been cleared,” said the email.

“So, if you have been negotiating with another AFSL but have not gotten that negotiation ‘across the line’ by Friday, you can continue to do pursue that negotiation.”