The Australian Securities and Investments Commission (ASIC) has won its first case arising out of the banking and financial services royal commission.
Failed firm Dover Financial Planning, and its sole director Terry McMaster, were convicted in the Federal Court of false and misleading conduct.
ASIC alleged Dover imposed a misleadingly titled "client protection policy" on its clients, which in fact offered greater protection to the firm itself.
ASIC's case centred on terms contained in the policies which exempted the company from responsibility for "poor financial advice", such as: "You agree to not complain or seek any form of compensation for any loss suffered as a result of being under-insured should an insured event occur."
Mr McMaster memorably ended his evidence to the royal commission abruptly in April 2018, collapsing in the witness box and leaving on an ambulance stretcher.
After two days of arguments earlier this year, Justice Michael O'Brien found Dover guilty of 19,402 separate charges of false, misleading or deceptive conduct over the contents of the "client protection policy" provided by Dover's authorised representatives between September 2015 and about March 2018.
Justice O'Brien also found Mr McMaster, "knowingly concerned in Dover's false, misleading and deceptive conduct."
"I have found that Dover engaged in conduct that was misleading, deceptive or likely to mislead or deceive … and made a false or misleading representation."
Justice O'Brien did not impose a penalty but said he would hear further from ASIC and Mr McMaster's lawyers on "the declaration that can and should be made by the court" and the timing of a further hearing on potential fines.
