"An exercise in Orwellian doublespeak": Dover Financial Advisers found guilty
27 November 2019, Written by David Simmons
The Federal Court has handed down its decision against Dover Financial Advisers, finding the company and its sole director guilty of false, misleading or deceptive conduct on 19,402 occasions.
The case arose from an Australian Securities and Investment Commission (ASIC) investigation, with the watchdog alleging that Dover misled and deceived clients via its 'Client Protection Policy', which was active from September 2015 through to March 2018 when the policy was withdrawn.
ASIC suggested that Dover withdraw the policy as it allegedly contained false and misleading representations as to the rights and protections available to clients, created an imbalance of rights in favour of Dover and sought to protect Dover's interests by avoiding liability to clients for poor financial advice.
Justice Michael O'Bryan found that the title of the Protection Policy "was highly misleading and an exercise in Orwellian doublespeak".
"The document did not protect clients. To the contrary, it purported to strip clients of rights and consumer protections they enjoyed under the law," said Justice O'Bryan.
The Federal Court also found that Terry McMaster, Dover's sole director who famously collapsed during a Royal Commission hearing last year, was knowingly concerned in the company's conduct.
As such, the Court was satisfied to make a declaration that McMaster had contravened the ASIC Act.
The Protection Policy was provided to 19,402 clients with statements of advice by representatives of Dover. 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'.
Justice O'Bryan noted that there had been a contravention of the law each time the Protection Policy was sent to a client, being 19,402 times.
The Court found that the policy was false, misleading or deceptive in circumstances where:
"ASIC brought this case because it believed Dover's Client Protection Policy was misleading and deceptive," says ASIC deputy chair Daniel Crennan.
"The law imposes important obligations on companies licenced to provide financial advice and for the protection of their clients. Clients who receive financial advice should not be misled as to what those obligations are and what they mean for them and their interests."
Penalties will be determined by the Court on a date yet to be fixed.
Dover Financial Services was forced to turn in its financial advisory licence in July 2018 following the ASIC investigation into the group's 'systematic failings'.
Business News Australia
Author: David Simmons