The federal court has dished out a $1.2 million penalty to Dover Financial Advisers as part of the fallout from its 2019 judgement that the stricken licensee engaged in “false, misleading or deceptive conduct” when it provided almost 20,000 ‘client protection’ policies.

As part of the ruling the firm’s former sole director, Terence McMaster, has also been ordered to pay $240,000 for being “knowingly concerned” in Dover’s conduct.

Dover had its AFSL cancelled by ASIC in September 2018 after it found that the protection policy provided to clients actually stripped them of protections by creating a “significant imbalance in the rights and obligations of the adviser and their client”, as well as prioritising the interests of the firm and its representatives over those of the clients.

In handing down his judgment today, Justice Michael O’Bryan said many of the clauses in the policy “…sought, perversely, to make the client responsible for failings and inadequacies in the advice provided to them”.

This contravention, he added arose directly out of the conduct of McMaster.

“The document did not protect clients,” O’Bryan said. “To the contrary, it purported to strip clients of rights and consumer protections they enjoyed under the law.”

Contributing to McMaster’s penalty, Justice O’Bryan continued, was the lack of understanding or contrition displayed by McMaster.

“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,” he stated.

McMaster made headlines when he collapsed on the stand at the 2018 Hayne royal commission.

ASIC commissioner Danielle Press said she hopes the penalty will be a lesson to others.

‘The purpose of Dover’s Client Protection Policy was to exclude or limit Dover’s liability to clients to its own financial benefit,” Press stated. “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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