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A Federal Court judge has slapped a $1.2 million fine on Dover Financial Advisers for its false or misleading conduct revealed in the Royal Commission, more than 15 months after ruling its so-called Client Protection Policy was an "exercise in Orwellian doublespeak".
The policy sought to absolve Dover of liability if its financial advisers breached any law or failed to research products on which they were giving advice, which in November 2019 was described by Justice O'Bryan as purporting to "strip clients of rights and consumer protections they enjoyed under the law".
The company and its founder Terry McMaster - who famously collapsed after cross examination during a Royal Commission hearing in 2018 - were found guilty of false, misleading or deceptive conduct on 19,402 occasions.
In the wake of the findings Terry McMaster, a now banned financial adviser and Dover's sole director, has been involved in a lengthy court battle with his own former advisers over the policy.
But on Friday Justice O'Bryan also fined McMaster a $240,000 penalty for being knowingly concerned in Dover's conduct, and claimed following the start of proceedings he had demonstrated "little if any contrition for the wrongdoing".
In Friday's penalty decision, O'Bryan said many clauses of the Client Protection Policy perversely sought to make the make the client responsible for failings and inadequacies in the advice provided to them.
He said that contravention arose out of the conduct of the most senior management within Dover, being McMaster himself.
While not satisfied that McMaster was consciously aware that 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.
"Mr 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," O'Bryan said.
Proceedings against Dover and McMaster were initiated by the Australian Securities and Investments Commission (ASIC) in September 2018, following the cancellation of Dover's Australian Financial Services licence and the entry into an Enforceable Undertaking under which McMaster agreed to exit the financial services industry permanently.
"The purpose of Dover's Client Protection Policy was to exclude or limit Dover's liability to clients to its own financial benefit," ASIC Commissioner Danielle Press said.
"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."
Dover and Mr McMaster have also been ordered to pay ASIC's costs.
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