On 12 September 2018, ASIC commenced civil penalty action in the Federal Court of Australia, Melbourne, against Dover Financial Advisers Pty Ltd (Dover) and its sole director, Mr Terry McMaster.

ASIC alleges that Dover misled and deceived clients from September 2015, when they commenced using their 'Client Protection Policy' (Protection Policy), to March 2018 when Dover withdrew the Protection Policy in response to ASIC’s concerns, because the Protection Policy:

• contained false and misleading representations as to the rights and protections available to clients;
• created a significant imbalance in Dover’s and its authorised representatives’ rights and obligations compared to those of clients; and
• sought to protect the interests of Dover and its authorised representatives by avoiding liability to clients for poor financial advice.

ASIC alleges that Mr McMaster was knowingly concerned in that conduct. He was Dover’s sole director, the Key Person named on Dover’s Australian financial services licence and a responsible manager during the relevant period.

ASIC seeks declarations that Dover and Mr McMaster contravened the financial services law; and pecuniary penalties against both for those contraventions.

The concise statement that ASIC filed in the Federal Court is available here.

This proceeding continues ASIC’s enforcement action in relation to Dover’s Protection Policy, which to date has resulted in the cancellation of Dover’s AFS licence and Mr McMaster’s permanent exit from the financial services industry.

The Protection Policy purported to be 'designed to ensure that every Dover client get [sic] the best possible advice and the maximum protection available under the law.' However, in ASIC’s view it was designed to burden clients with the potential liability for losses resulting from advice that was negligent, inappropriate or not in a client’s best interests. This is inconsistent with or voided by the financial services law in the Corporations Act.

Background

The focus of ASIC’s current Federal Court proceedings and the previous Court Enforceable Undertaking provided by Dover concerns the Dover Protection Policy. This action has resulted from concerns uncovered by ASIC during ASIC’s investigation commenced in 2017. 

On 29 March 2018, following ASIC’s intervention, Dover complied with ASIC’s requirement that it withdraw the Protection Policy.  On 28 June 2018, ASIC accepted a Court-enforceable undertaking from Dover and Mr McMaster, by which Dover’s AFS licence was cancelled and Mr McMaster was removed from the financial services industry.

A copy of the EU and ASIC’s media release can be viewed here (refer:18-195MR).

Editor's note:

This media release was edited on 17/09/2018 to correct that Mr McMaster was a responsible manager, not the only responsible manager during the relevant period.

Editor's note 2:

The first directions hearing of the matter is set down for 12 October 2018.

Editor's note 3:

The first directions hearing on 12 October 2018 was dealt with administratively and the parties will return before the Federal Court on 7 December 2018.

Editor's note 4:

Following a case management hearing on 7 December 2018, the matter has been listed for a two-day trial commencing 12 June 2019.

Editor's note 5:

The trial on liability concluded on 13 June 2019. His Honour Justice O’Bryan reserved his decision.

Editor's note 6:

His Honour Justice O’Bryan will deliver judgment on liability at 4:15pm on Friday 22 November 2019 at the Federal Court of Australia.

Editor's note 7:

The Federal Court of Australia found Dover Financial Advisers engaged in false, misleading or deceptive conduct. More at 19-321MR.