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Terry vs Golliath

Back in May this year Terry McMaster of Dover Financial Advisers Pty Ltd (Dover) put out a pretty stunning post on the Dover website:

https://www.dover.com.au/friday-reflections/asic-fakes-dover-evidence-for-the-royal-commission/?fbclid=IwAR3QwwDLBiygJECAlE-jVpNU95rmk-d2lI6R4kWJ3xmTAnq6MtDtPrNNA2Y

Essentially, Mr McMaster alleged that the Australian Securities and Investments Commission (ASIC) had engaged in misleading and deceptive conduct by submitting false evidence to the Treasury and the Royal Commission.

Background

Firstly, it’s important to have a look at how we got here as the proceedings by ASIC against Dover and Mr McMaster have a bit of history.

On 12 June 2018 Dover announced that it would cease providing financial services. This sent shockwaves through the financial planning community and resulted in scores of advisers having to transfer to new licensees in an extremely short timeframe. In fact, that timeframe was so short as to make it difficult for those new licensees to complete their standard on-boarding procedures quickly enough to allow continuous service to be provided to affected clients.

Then, on 29 June 2018 we learnt more when ASIC announced that Dover and Mr McMaster had entered into a Court Enforceable Undertaking (the EU) that Dover would cease operating its financial services business and Mr McMaster would remove himself permanently from the financial services industry.

The EU resulted from an ASIC investigation into Dover’s Client Protection Policy and ASIC’s concerns that “Dover had failed deliberately and systemically 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.”

On 12 September 2018 ASIC announced that it would take civil penalty action against Dover and Mr McMaster. ASIC alleged that Dover misled and deceived clients because the 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 to those of clients; and

  • sought to protect the interests of Dover and its authorised representatives by avoiding liability to clients for poor financial advice.

The above matter is before the Courts still.

Incredibly, in an affidavit before the Court an ASIC solicitor admitted that it was “very unlikely” that ASIC had any documents that would show anyone had been misled, deceived or suffered loss as a result of the Client Protection Policy.

Though, it must be noted, this does not mean that the Policy may not have been in breach of the Corporations Act as alleged by ASIC. Indeed ASIC’s Counsel, Bernie Quinn QC, noted this fact by saying that the law does not require that a certain number of people have actually read the document.

Fake Evidence Allegations

In Mr McMaster’s post he sets out a number of allegations that ASIC made a number of false or misleading submissions.

The bulk of these submissions relate to advice provided to one particular client of Mr McMaster, Amit Vohra. At the time of the meetings with Mr McMaster, Mr Vohra was CEO of the General Practice Registrars Association and was seeking advice regarding his SMSF.

Interested readers should click through to Mr McMaster’s post to see his full list of allegations. The evidence all comes from audits conducted on Dover’s files in 2016. Mr McMaster then alleges that the fake evidence was used more broadly in Royal Commission and Treasury submissions and further used by ASIC in the course of obtaining the EU against Dover and Mr McMaster.

If the above is true, it will be interesting (to say the least) to see how the ASIC Court action pans out.

I do find it strange that, if there were false allegations made that were used to force the cancellation of Dover’s AFSL, why that was not contested at the time. Not being involved in the matter though this could be the case for any number of reasons.

Where to From Here?

ASIC’s allegations against Dover and Mr McMaster appear to have been heavily contested judging by media reports on proceedings.

It seems that the matter is heading for trial which will be an intriguing matter to follow for all those involved in financial services.

I know I’ll be following proceedings closely and will provide more updates as they become available.

Liam Young