ASIC takes Dover director to court

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

ASIC alleges that Dover misled and deceived clients from September 2015, when it commenced using its 'Client 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 with 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 named as the key person on Dover’s Australian Financial Services Licence, was its sole director and the only 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.

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 AFSL 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.

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 an investigation that 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 AFSL was cancelled and Mr McMaster was removed from the financial services industry.