Witness collapses during tense session at banking royal commission

A witness has collapsed during a tense interrogation at the bank inquiry in Melbourne this afternoon.

A witness has collapsed under cross examination at the financial services royal commission in Melbourne shortly before 4pm.

Terry McMaster, the head of financial advice group Dover, was being asked questions by counsel assisting when he began breathing heavily.

Commission staff called for an ambulance, while paramedics have arrived at the scene and attended to the witness. A wan Mr McMaster was sitting up and talking as paramedics wheeled him on a trolley into the back of an ambulance at about 4.20pm.

A man accompanying Mr McMaster abused waiting media as he was loaded into the ambulance.

Before the incident occurred, counsel assisting the commission Mark Costello had forced Mr McMaster to agree that the policy, which sought to carve Dover out from a number of liabilities related to poor financial advice, was “Orwellian” in its nature.

Mr Costello asked Mr McMaster to agree if Dover’s attitude was to seek the maximum protection it possibly could from any liability.

“Yes,” Mr McMaster said.

Mr Hayne then interrupted.

“Does it then follow that the document is itself misleading or deceptive? If it were misleading or deceptive it might draw attention to relevant provision of the ASIC Act,” commissioner Hayne said.

Mr Costello said the document was “completely consistent with a culture where client complaints are to be fought at all cost.”

Mr McMaster said that wasn’t correct.

He then began breathing heavily, before turning “as white as a sheet”, according to one onlooker in the Federal Court room.

Terry McMaster, the head of financial advice group Dover, leaves the Federal Court with the aid of paramedics after collapsing while being cross examined during the Banking Royal Commission in Melbourne this afternoon. (AAP Image/Stefan Postles)

During a tense interrogation between Mr Costello and Mr McMaster, it was revealed Dover was the only large financial advice licensee to decline to respond to the royal commission’s request for information about misconduct.

Up until March 2018, Dover had a policy that sought to relive it of any responsibility for poor conduct by its advisers. That policy was withdrawn and replaced in April this year after the corporate regulator raised concerns with the document.

“I’ve certainly understood and regretted the use of the word protection. That’s obviously been changed,” Mr McMaster said.

The policy document sought to clear Dover of responsibility for “failing to adequately research or recommend financial products” and “falling to consider your circumstances when recommendation a financial service” and “recommending a financial service that a reasonable financial planner would not recommend”.

Mr Costello asked: “The entire intention of this document is to minimise Dover’s liability for the work of its authorised representatives. That’s correct isn’t it?”

Mr McMaster said: “As a sentence, that is correct.”

Dover Financial Advisers had been lined up as the final case study in the second week of the round of hearings for the royal commission’s look into financial advice. The Melbourne-based business is the tenth largest licensee in the country and has grabbed the attention of the corporate watchdog on numerous occasions.

During questioning, it was revealed that Dover did not alert the royal commission to the fact that two of its advisers were banned by ASIC. The commission heard Mr McMaster instantly told an adviser they would be hired by Dover despite their previous licensee, Commonwealth Bank’s Financial Wisdom, declaring that it would report the adviser to ASIC for compliance breaches.

“To be honest, your situation reflects poorly on financial wisdom and its compliance team,” Mr McMaster said in a letter to the adviser. “Dover will take you on. We are happy to do so with immediate effect.”

Mr Costello asked my Mr McMaster didn’t give the royal commission evidence that one of his financial advisers had “suffered the most serious consequence that can become an authorised representative and was banned by the regulator”.

“You didn’t’ think that was relevant information to present to the commission?,” Mr Costello asked. Mr McMaster said: “I think the sentence was there’s no complaint. There should have been more clarity around those words.”

In his witness statement to the regulator, Mr McMaster had said: “none of Julie’s (Hamilton’s) clients have complained about inappropriate advice or any other matter.”

Mr McMaster said he eventually “got it wrong” by recruiting the advisers who were being sacked from their old place of work.

Mr Costello said: “Does the fact that two of the advisers that you were content to authorise on the assumption that is was a commercial dispute with financial wisdom were banned by ASIC, one for three years and one permanently, give you cause for reflection about the way you recruit financial advisers.” Mr McMaster responded: “It does.”

The commission will resume tomorrow at 9.45am.

FPA tried to hush guru complaint

The Financial Planning Association last week asked the banking royal commission not to air details of a complaint Fair Work Commission member Donna McKenna made against celebrity adviser Sam Henderson because it would “cause significant damage” to his reputation, the inquiry has heard.

Mr Henderson gave advice to Ms McKenna that would have resulted in her immediately losing $500,000, and an employee of his planning shop Henderson Maxwell impersonated the FWC member in six phone calls to her super fund, the commission has heard.

Ms McKenna rejected the advice and complained to the FPA about Mr Henderson’s conduct.

This morning, the commission heard details of a letter the FPA’s “head of professionalism”,

Banking Royal Commission

What it means for the banks

Opposed by the banks right up until the moment they asked for it in November, the commission presents both obvious dangers and hidden opportunities to the sector.

Their already-battered public reputations have taken further hits and commissioner Kenneth Hayne has mulled the prospect of tighter regulation.

Some of the worst areas exposed by the commission so far - particularly the commissions paid to car dealers and mortgage brokers - are areas where some banks would like to see a crackdown, but lack the guts to take action that would put them in danger of losing market share.

New regulations cutting mortgage broker commissions, for example, would allow the banks to compete on a level playing field while crushing an industry they have allowed to steal away half of all home loan sales.

John Bacon, sent to the commission on April 18.

In the letter, Mr Bacon said that Ms McKenna’s complaint, which was lodged about a year ago, had still not been resolved by the FPA’s Conduct Review Commission (CRC).

“Again the FPA asks that the matter be treated confidentially as any publication by the royal commission identifying Mr Henderson would render the CRC process worthless to Mr Henderson and cause significant damage to the reputation of Mr Henderson, undermine the process of the CRC and damage the FPA’s relationship with other members,” Mr Bacon said in the letter.

Giving evidence this morning, the chief executive of the FPA, Dante De Gori, said that “members do expect that until the matter is concluded their details and the matter of the complaint will be kept confidential”.

Counsel assisting the commission Rowena Orr QC at the federal Court in Melbourne.

Asked by counsel assisting the commission, Rowena Orr, QC, why so many of the disciplinary outcomes recorded on the FPA’s website had the details of the member “blinded”, Mr De Gori said that the organisation tried to keep members within the tent so that they could be educated and their behaviour improved.

“We don’t have that right to take away someone’s license but we do have that ability to educate,” he said.

He said an expelled member “can continue practising without any education or any professional standards to adhere to at all”.

Ms Orr asked: “But isn’t a member of the public entitled to see who these people are who you have imposed sanctions on for these breaches?”

“Where that individual is a threat to the public, yes, absolutely, they should not only be named but expelled,” Mr De Gori said.

He said the threat of public exposure was the FPA’s “strongest” lever in taking action against members.

The commission has heard that in emails to the FPA Mr Henderson slammed Ms McKenna for “nitpicking” and described her complaint as a “storm in a teacup”.

He also went above the head of investigator Mark Murphy to discuss the case with Mr Bacon and Mr De Gori.

In a report delivered in October, Mr Murphy said there was a “strong and reasonable inference that the member’s conduct stemmed from a lack of objectivity or a conscious decision to place his own interests before those of the clients”.

Mr De Gori said Mr Henderson had not co-operated with the investigation, which had “stalled to some extent” since January because Mr Murphy left the FPA in December and a hearing last month had not finished”.

The CRC has rejected a proposal to settle the dispute with Mr Henderson. It proposed a 12-month media ban on Mr Henderson, who has regularly appeared on News Corp’s Sky Business and in the pages of Fairfax Media’s Australian Financial Review.

“Since March there’s been ongoing discussion between the FPA and Mr Henderson in regards to the particulars of the matter,” Mr De Gori said.

Asked when Ms McKenna’s complaint would be resolved, he said: “I can’t give you a deadline but it’s imminent — it’s got to be imminent.”