Dover Financial Advisers is to pay a $1.2 million penalty for engaging in false or misleading conduct, and Terry McMaster, Dover’s sole director, a $240,000 penalty for being knowingly concerned in Dover’s conduct, the Federal Court has ordered.
A statement from ASIC says that these penalties follow the Federal Court’s 22 November 2019 judgment, which found that Dover engaged in false, misleading or deceptive conduct when it provided a Client Protection Policy to 19,402 clients between around 25 September 2015 and 30 March 2018, and that McMaster was knowingly concerned in Dover’s contraventions (see:Court Finds Dover Protection Policy False, Misleading or Deceptive).
“In that judgment, His Honour Justice Michael O’Bryan found that the title of the Client Protection Policy ‘was highly misleading and an exercise in Orwellian doublespeak. The document did not protect clients. To the contrary, it purported to strip clients of rights and consumer protections they enjoyed under the law’,” ASIC states (see: ASIC Reveals Reasons for Dover Closure as McMaster Exits Industry.)
The regulator notes that in handing down his penalty decision, Justice O’Bryan said, ‘many clauses of [Dover’s] Client Protection Policy sought, perversely, to make the client responsible for failings and inadequacies in the advice provided to them’, and that ‘the contravention arose out of the conduct of the most senior management within Dover, being Mr McMaster’”.
ASIC says that while not satisfied that McMaster was consciously aware that the Client Protection Policy contained a false or misleading statement, Justice O’Bryan observed that he had been aware of all the relevant facts making it so, and that: ‘Mr McMaster’s behaviour following the institution of these proceedings indicates that he has only a limited appreciation of the seriousness of the contravening conduct and little if any contrition for the wrongdoing.’
…the significant penalties handed down demonstrate the seriousness of this misconduct…
ASIC Commissioner Danielle Press says: “The purpose of Dover’s Client Protection Policy was to exclude or limit Dover’s liability to clients to its own financial benefit. The significant penalties handed down… demonstrate the seriousness of this misconduct and will act as a deterrent to others who believe they can get away with similar behaviour.”
ASIC says that in arriving at the penalty, the Court considered the 19,402 contraventions of the law – one contravention for each time the Protection Policy was provided to a client.
Dover and McMaster have also been ordered to pay ASIC’s costs.
As background ASIC says this proceeding was commenced on 13 September 2018 and follows the cancellation of Dover’s Australian Financial Services licence and the entry into an Enforceable Undertaking pursuant to which McMaster agreed to exit from the financial services industry on a permanent basis.
