McMaster to blame for Dover collapse: ASIC

ASIC has just now issued a statement announcing an EU and its intention to cancel Dover’s licence.

The statement explains that the cancellation follows an investigation into Dover, primarily relating to the licensee’s so-called Client Protection Policy – which came under scrutiny at the royal commission’s second hearing - and its director Terry McMaster.

"Due to his significant involvement in this conduct, ASIC was concerned that Mr McMaster, in his individual capacity and in his capacity as a responsible officer of Dover: is not of good fame and character; impaired Dover’s ability to provide the Financial Services covered by the AFSL; and is likely to contravene a Financial Services Law in the future.

"ASIC was concerned that by intending to rely upon the Protection Policy Dover had failed deliberately and systematically for over two years to: comply with its obligations to act efficiently, honestly and fairly; comply with financial services laws; and take reasonable steps to ensure that its representatives comply with the financial services laws," the statement said.

"ASIC considered certain terms of the Protection Policy to be detrimental to clients and unfair under section 12BG of the ASIC Act because the terms: created a significant imbalance in the rights and obligations of the adviser and their client; and were directed to protecting the interests of Dover and its authorised representatives in avoiding liability to a client for bad advice."

The cancellation was first reported by ifa on Friday 8 June, following an email from Mr McMaster to authorised representatives that referred to an ASIC negotiation and agreement.

The email was coy, however, as to the underlying reasons for ASIC intervention.

A subsequent statement from ASIC confirmed than a formal investigation into the licensee was commenced in 2017, but again gave no details of the conduct in question.

Dover's almost-400 authorised representatives are currently in various stages of transitioning to new AFSL arrangements. 

Under cross-examination at the royal commission, Mr McMaster faced questions about the 'client protection policy', which counsel assisting Mark Costello QC described as "Orwellian". 

Dover's AFSL will be cancelled on 6 July.

The investigation into Dover is ongoing.