The Federal Court has ordered Dover Financial Advisers and its founder Terry McMaster to pay penalties of $1.2 million and $240,000 respectively for engaging in false or misleading actions, compromising clients’ interest in the process.

Justice Michael O’Bryan issued the orders last Friday, more than a year after he upheld claims by the Australian Securities and Investments Commission (ASIC) against the firm and Mr McMaster.

ASIC took them to court in September 2018 after cancelling Dover’s licence and brought an enforceable undertaking to remove Mr McMaster from the financial services industry. Mr McMaster, who was a sole director of the firm, collapsed while appearing at the Hayne royal commission hearings in 2018.

Justice O’Bryan ruled in November 2019 that Dover engaged in false, misleading or deceptive conduct when it provided a Client Protection Policy to 19,402 clients between around 25 September 2015 and 30 March 2018 and that Mr McMaster was knowingly concerned in the firm’s contraventions.

He said the policy “was highly misleading and an exercise in Orwellian doublespeak” and did not protect clients. On the contrary, the policy purported to strip clients of rights and consumer protections they enjoyed under the law.

In handing down the penalties, Justice O’Bryan said “many clauses of [Dover’s] Client Protection Policy sought, perversely, to make the client responsible for failings and inadequacies in the advice provided to them”.

He stated “the contravention arose out of the conduct of the most senior management within Dover, being Mr McMaster”.

The penalties have been welcomed by ASIC, with Commissioner Danielle Press saying it serves as a warning to the financial services sector.

“The purpose of Dover’s Client Protection Policy was to exclude or limit Dover’s liability to clients to its own financial benefit,” Ms Press said. “The significant penalties handed down [on Friday] demonstrate the seriousness of this misconduct and will act as a deterrent to others who believe they can get away with similar behaviour.’

Click here for the court ruling.