Dover found guilty by Federal Court

In handing down the Federal Court’s final decision, Justice Michael O’Bryan ruled that the introductory clause contained in Dover’s Client Protection Policy was “misleading or deceptive” or “likely to mislead or deceive” within the meaning of s 1041H of the Corporations Act and s 12DA(1) of the ASIC Act and a “false or misleading representation” within the meaning of s 12DB(1)(i) of the ASIC Act.

Justice O’Bryan said in his judgment that the introductory clause was false, misleading or deceptive because the Client Protection Policy did not ensure that clients received the maximum protection available under the law.

The judgement noted that the evidence established that 19,402 clients received the Client Protection Policy in conjunction with a statement of advice
from Dover’s authorised representatives between September 2015 and March 2018.

“Rather, the limiting clauses in the policy (other than the Best Efforts Clause and the Continued Retainer Clause) purported to remove or dilute the protections that clients would otherwise have under the law,” Justice O’Bryan said.

“In effect, the Introductory Clause represented that the limiting clauses constituted the maximum protections available to clients under the law when that was not the case.”

The judgment caps off a rather eventful year for both Dover Financial and Mr McMaster after ASIC took the licensee to court in September last year.

ASIC alleged that Dover misled and deceived clients from September 2015, when it commenced using its Client Protection Policy, to March 2018 when Dover withdrew the policy in response to ASIC’s concerns.

It was concerned Dover’s Client 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.

Since then, Mr McMaster has accused the Hayne royal commission for perpetuating a “false narrative” on Dover and releasing an interim report “full of deliberate misstatements”.

Dover Financial shut down its AFSL in June 2018 following an agreement with ASIC. However, Mr McMaster has always maintained that he was forced by ASIC to shut down the dealer group.

More to come.

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].