The Federal Court of Australia has found that Dover Financial Advisers engaged in false and misleading conduct between 25 September, 2015 and 30 March, 2018 and Dover’s sole director, Terrence (Terry) McMaster has contravened the Australian Securities and Investments Commission Act 2001.
Further to that, the judge found that the title of the protection policy “was highly misleading and an exercise in Orwellian doublespeak” and that the document did not offer protection to the clients.
The Court found that the policy was false, misleading or deceptive in circumstances where:
- it did not ensure that clients received the maximum protections available under the law;
- it purported to remove or dilute the protections that clients would otherwise have had under the law;
- it sought to prevent clients from making a claim against Dover and its authorised representatives on the basis that advice could not be understood;
- it sought to exclude Dover’s liability for most foreseeable breaches of the law by its authorised representatives; and
- it sought to limit or exclude Dover’s liability to clients in a way that was inconsistent with the law.
Additionally, the Court also found that McMaster, Dover’s sole director, Key Person named on Dover’s Australian Financial Services Licence and a responsible manager during the relevant period, was knowingly concerned in Dover’s contraventions having regard to concessions by McMaster, including that he was responsible for:
- determining and/or approving the Protection Policy; and
- requiring Dover’s representatives to incorporate the Protection Policy with statements of advice provided to clients.
The Australian Securities and Investments Commission (ASIC) said it had brought this case because it believed Dover’s Client Protection Policy was misleading and deceptive.
“The law imposes important obligations on companies licenced to provide financial advice and for the protection of their clients. Clients who receive financial advice should not be misled as to what those obligations are and what they mean for them and their interests’, ASIC Deputy Chair Daniel Crennan QC said.
His Honour Justice Michael O’Bryan rejected the defendants’ primary submission that because ASIC had not sought to prove that any Dover client had suffered loss or damage by reason of the protection policy then the defendants had not engaged in misleading and deceptive conduct within the meaning of the ASIC Act.
In delivering his reasons for judgment, Justice O’Bryan noted that there had been a contravention of the law each time the protection policy was sent to a client, being 19,402 times.
According to ASIC’s announcement, penalties would be determined by the Court on a date yet to be fixed.
