The Federal Court has ordered Dover Financial Advisers pay a $1.2 million penalty for engaging in false or misleading conduct and that the firm’s sole director, Terry McMaster, pay $240,000 for being “knowingly concerned” in Dover’s conduct.
The penalties followed the Federal Court’s judgement on 22 November, 2019, which found that Dover engaged in false, misleading or deceptive conduct when it provided a client protection policy to 19,402 clients between 25 September, 2015, and 30 March, 2018, and that McMaster was knowingly concerned in Dover’s contraventions.
In that judgment, 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”.
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”.
“The contravention arose out of the conduct of the most senior management within Dover, being Mr McMaster.”
While not satisfied that McMaster was consciously aware 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 “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”.
Danielle Press, Australian Securities and Investments Commission (ASIC) commissioner, said 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 today demonstrate the seriousness of this misconduct and will act as a deterrent to others who believe they can get away with similar behaviour,” Press said.
In arriving at the penalty, the Court considered the 19,402 contraventions of the law, which equalled one contravention for each time the protection policy was provided to a client.
Dover and McMaster had also been ordered to pay ASIC's costs.