Speaking to ifa, McDougall Kelly and Martinis senior partner John Kelly said former Dover authorised representatives may not be covered under their new licensees’ PI policies for future claims made against the ARs for alleged errors that occurred during their time under Dover’s licence.
Mr Kelly said there were three potential outcomes for Dover’s former advisers depending on what action both Dover and the advisers’ new licensees have taken with their insurers.
“Dover purchases run-off cover. Ideally for seven years. Dover needs to do its best to arrange run-off cover as part of its obligation under Section 912B of Corporations Act. However, insurers may be reluctant to offer this cover given their own concern about future claims,” he said.
“The Dover ARs can look for a new home. However, the new licensee is unlikely to pick up the exposure from the Dover time period. In other words, for the new ARs, the retroactive date under the new licensees policy would be the day they join. Therefore, any claim against that AR for alleged errors during the Dover period would not be covered. The licensee may try to get this cover, however it’s unlikely that their insurer will agree to this.
“If one of the two solutions above is not implemented then there is no insurance cover for future claims made against ARs for alleged errors that happened during the Dover period. This is a bad outcome for the ARs and a bad outcome for consumers.”
However, Mr Kelly added that there are several steps that Dover advisers can take to help their position, including assessing their client files and notifying the current Dover insurer as soon as possible.
“This is referred to as notifying a circumstance that may give rise to a claim,” he said.
Dover advisers should also review every client file once they’ve joined a new licensee and provide updated advice under that licensee’s regime.
“Every file should be assessed. What they are trying to do is provide every client ‘advice’ under the new AFSL as quickly as possible,” Mr Kelly said.
“This will be a very challenging period for these ARs and I have a great deal of sympathy for them. It’s their livelihood and careers at risk, so I wish them all the best. To protect themselves (and ultimately consumers) they will need to consider the advice above.”
McMaster never valued the benefits that PI brings to clients and advisers when Dover was running. The $500k excess, which few advisers understood when they joined, was evidence of this.
I will bet my house that Dover goes into administration before McMaster buys run-off cover for the existing advisers. The new licensees shouldn’t carry it, nor should the PI providers. So the advisers will have to cover their own risk – which is not a bad outcome really given the obvious issues with some advisers in the licensee.
terry is one clever cookie.
“Obvious issues with some advisers in the licensee” – care to point these out? ASICs EU sure didn’t.
there was no issues with Dover advisers. all of the Dover advisers were perfectly qualified with masters degrees or equivalent. the RC was fiction. ASIC is wrong
Dover advisers were wronged. they have been defamed
everyone is wrong except for Dover and it’s advisers
there was no evidence of wrongdoing, no one fainted
Terry is a model citizen and a benevolent leader and an example for the rest of the industry to follow
Dover advisers set the standard in what it means to be professional, and independent and compliant
you need to insert “only if” at the beginning of each sentence
sometimes it takes the extreme to point out the obvious
Still waiting for you to elaborate on your initial claim..
Yes, from Shepparton to everywhere else in Australia, Dover advisers certainly set the bar in something. But I’m not convinced it was professionalism, independence or compliance.
Any leader of major licensees will could privately share examples of advisers they terminated who later landed in Dover. Many of these examples were reported to ASIC at the time as part of normal breach reporting. And ASIC would have noticed they re-licensed….
i’ll take shares or cash, no property thanks.
“alledged errors”?? Does this law firm even read the EU?
So what you are saying is that 400 plus AR’s paid innocently for their very important PI cover and the insurer accepted the premiums paid knowing that the AR’s would possibly not get the cover they where paying for. Sounds almost like fraud. Thanks again for more negative news.
The excess on Dover’s PI just prior to closure was $500,000. A reflection of previous claims experience.
Did the new Dover co-op get insured??
something doesn’t smell right in all this
lawyers = locusts.
ranked lower than every other occupation by 7bn + people worldwide
caste no bar, religion no bar, education no bar, ethnicity no bar consistently out rank all other occupations (i wanted to call them a profession but i just couldn’t do it)
7 billion people cannot be wrong.
locusts or leeches, I am undecided and in two minds about it
I am more inclined toward hyenas… Locusts fly in and eat everything digestible; leeches live off the host while gradually sucking them dry. Hyenas harass to death wounded animals, attack and try to steal what the true predators kill; and are some of the ugliest, most self serving animals in Nature. Yes, hyenas fit [or inflate] the bill.
You would think that the PI insurers could get together on this wouldn’t you. Given the history of Dover of course a new licensee, if they are a responsible licensee that is, would insist that every client is reviewed and issued a new foundation SOA under their guidelines. That could take 6 to 12 months to do so the existing Dover PI insurer, given they were obviously happy with the way Dover did things, would take on a reducing 12 month liability for any advice given under the previous license. The new licensees PI insurer therefore takes on an increasing liability as and when the clients are issued under the new SOA. IF a Dover adviser doesn’t review the clients in the agreed time and a subsequent claim is made relating to Dover time then the adviser is rightly and fairly totally responsible fro any client loss. And where is McMaster’s responsibility as the responsible officer?
But is it more likely the insurers and all the lawyers will fight against commonsense? Of course they will and the clients and the industry’s reputation will suffer again.
More scare-mongering by the lawyers. I am looking forward to the day when they are exposed for exorbitant fees, cumbersome contracts and too much unnecessary detail that stops progress.
An article like this is not helpful to the Dover Advisers as an insurer reading this would probably not provide the required insurance cover.
Mr Kelly should be more professional with the comments he is allowed to post in the media.
Does his firm have “No win no fee policy”?
you made me laugh out loud. that is how mr kelly gets his business
McMaster will go bankrupt just wait and see, he will have all of his assets protection in place through careful setup intricate trust structures and shell companies.
My condolences go out to the advisers who have now been left bereft of income and maybe no licence to move on to. They still have staff to pay and many other overheads, i feel for them and wish them my best.
i miss dova
Thanks Terry. More bad news. The licensee that just keeps on giving!
i wish dover advisers good luck. i believe they have obtained a legal firm to make a claim against dover
best of luck to you with that and your careers
my sympathies to you
yes my condolences also