On 28 June 2018, ASIC accepted a Court Enforceable Undertaking from Melbourne-based Dover Financial Advisers Pty Ltd and its sole director, Mr Terry McMaster. Mr McMaster is named as the Key Person on Dover’s AFS Licence (AFSL).

Under the terms of the Court Enforceable Undertaking, Dover will cease operating its financial services business by 6 July 2018, and apply to ASIC to commence the process to cancel its AFSL. Mr McMaster has also undertaken to remove himself permanently from the financial services industry.

The Court Enforceable Undertaking resulted from an ASIC investigation commenced in 2017, which included consideration of Dover’s “Client Protection Policy” (Protection Policy). ASIC was concerned that by intending to rely upon the Protection Policy Dover had failed deliberately and systematically for over two years to:

• comply with its obligations to act efficiently, honestly and fairly;
• comply with financial services laws; and
• take reasonable steps to ensure that its representatives comply with the financial services laws.

ASIC considered certain terms of the Protection Policy to be detrimental to clients and unfair under section 12BG of the ASIC Act because the terms:

• created a significant imbalance in the rights and obligations of the adviser and their client; and
• were directed to protecting the interests of Dover and its authorised representatives in avoiding liability to a client for bad advice,

and that these terms conflicted with the obligations of an AFSL holder under the financial services law regarding client complaints and claims.  

ASIC was also concerned that Dover lacked the organisational competency required of an AFSL holder.

Due to his significant involvement in this conduct, ASIC was concerned that Mr McMaster, in his individual capacity and in his capacity as a responsible officer of Dover:

• is not of good fame and character;
• impaired Dover’s ability to provide the Financial Services covered by the AFSL; and
• is likely to contravene a Financial Services Law in the future.

ASIC’s investigation into Dover is continuing.

Background

The enforceable undertaking resolves concerns that ASIC initially raised with Dover on 22 March 2018 in respect of the Protection Policy. Mr McMaster prepared the Protection Policy, and Dover’s authorised representatives were required to refer to it in statements of advice provided to their clients. The Protection Policy was in effect from 28 September 2015 until 29 March 2018, when in response to a demand by ASIC, Dover withdrew the Protection Policy and notified all former and current clients that it would not rely on it in response to a claim or complaint.

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 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.

On 18 May 2018 ASIC notified Dover that its concerns arising from the Protection Policy were significant and that ASIC would conduct an administrative hearing to assess Dover’s ongoing ability to operate a financial services business.

Subsequently ASIC and Dover engaged in discussions in relation to ASIC’s concerns. Dover informed ASIC it would cease operating its financial services business under a timetable to be negotiated with ASIC. Dover also informed ASIC that it would be notifying its authorised representatives on 8 June 2018 that it intended to request ASIC to cancel Dover’s licence and that they could no longer provide financial advice as a representative of Dover from 8 June 2018.

A copy of the EU can be viewed here.

More information on Dover is available here.