- Former Dover Financial boss Terry McMaster claims ASIC has a 'vendetta' against him
- By David Chau
- Contributed by: Andy ( 11 articles in 2018 )
After being sued for allegedly deceiving his clients, former financial services executive Terry McMaster has accused the corporate regulator of pursing a "vendetta" against him and being "too chummy and chatty" with the big banks.
The former boss of Dover Financial — which was stripped of its financial services licence two months ago — said he was a "victim of deliberate humiliation and harassment" perpetrated by the Australian Securities and Investments Commission since last year.
He also told the ABC that the events of the past few months had taken a toll on his mental health.
"It was designed and calculated to injure reputations. That's hurtful, and it has mental health implications. I won't go further than that," he said.
ASIC missing in action
ASIC is the law enforcement agency that shies away from enforcement, particularly at the top end of town, writes Ian Verrender.
ASIC's lawsuit claims that Dover imposed a misleadingly titled "client protection policy" on its clients, which offered greater protection to the firm itself.
In particular, the regulator alleges that the policy contained terms that exempted the company from responsibility for "poor financial advice".
It contained terms like: "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."
Bottom end of the 'culpability ladder'
Mr McMaster defended the way he and Dover handled the matter, and confirmed he would defend the matter in court.
"In the last 12 years, there have only been 31 complaints against Dover, compared with tens of thousands against the big banks.
"Not one client has complained [specifically] about the client protection policy … and no client suffered any loss at all."
Then why did he face an intense grilling at the banking royal commission back in April?
"That's what I've been wondering," he replied.
Mr McMaster fainted on the witness stand after he was accused of lying and had to be taken away by paramedics.
The financial planner also said that Dover's conduct "at worst" was at the "bottom rung of the culpability ladder".
So how does the fact that the major banks have done "much worse things" excuse him and his firm?
"I don't think the greater sin of another person excuses conduct," he said.
"I'm pointing out that the glaring discrepancy in the conduct of ASIC … horrific discrepancy."
"The major banks take billions from customers over a decade, are subject of thousands of complaints, and spend years fighting their penalties."
He was particularly bitter about the fact that he was forced to close down his business, while the major banks "got off lightly".
One example he pointed to was last Thursday's hearing, when it was revealed that Tim Mullaly, ASIC's senior enforcement leader, allowed CommInsure to negotiate its penalty for misleading advertising.
"Could you please consider and let us know whether this is sufficient for CommInsure to resolve the matter, including by way of payment of the community benefit payment, in absence of infringement notices," Mr Mullaly wrote in an email shown to the commission.
Even CommInsure executive Helen Troup could hardly classify ASIC's conduct as "enforcement action".
"I'm not sure if enforcement action is the correct term, but we did come to an agreement as to how to close the matter," Ms Troup said at the witness stand.
Being the last to know
The financial planner also said he was the last to discover that the client protection policy could reasonably be considered "deceptive".
"We did not believe client protection policy was deceptive until 22 March, when we received a letter from ASIC, expressing concerns," he said.
"Apparently after it had already given information about the client protection policy to the royal commission, which is very strange — because we found out last.
Banks take money for nothing
Banks raked in hundreds of millions of dollars in fees for services they didn't provide. The penalty is they have to pay it back.
"We immediately met with ASIC, we did not disagree or argue with them. We said 'what could we do' to fix this?"
He argues that conduct like this shows he is of "good fame and character", which is the opposite of what ASIC is alleging about him.
"Instead you get shafted in front of a royal commission," he said.
Mr McMaster believes it was an unintentional misnomer, and things may have turned out differently if the policy was not called a client "protection" policy.
"If it was headed client 'information' policy, it would have been different.
"It was just one word in a heading — it was a mistake."
Follow David Chau on Twitter @chaudave.