ASIC mounts civil action against Westpac
The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings against Westpac for poor financial advice provided by one of its authorised representatives.
The regulator announced today it had commenced the Federal Court proceedings in relation to alleged poor financial advice provided by one of its former financial planners, Sudhir Sinha.
Court documents filed by ASIC show the regulator is alleging that in four sample client files selected by ASIC, Sinha breached the 'best interests' duty under the Corporations Act, provided inappropriate financial advice, and failed to prioritise the interests of his clients.
Sinha provided financial advice in the Perth area as an employee of Westpac from 2001 to November 2014 and was banned by ASIC for five years in 2017 for failure to meet his ongoing advice obligations.
The civil proceedings against Westpac devolve from its status as Sinha’s licensee during the period in question and argue that Westpac is liable for the alleged breaches of the 'best interests' obligations by Sinha under section 961K of the Act.
ASIC also alleges that Westpac contravened sections 912A(1)(a) and (c) of the Act, which requires Westpac to do all things necessary to ensure that the financial services covered by its licence are provided efficiently, honestly and fairly, and to comply with financial services laws.
Section 961K of the Act is a civil penalty provision, and attracts a maximum penalty of $1 million per contravention.
ASIC noted that separately, Westpac has a significant remediation programme underway in respect of Sinha’s conduct and that Westpac had reported to ASIC that, as at 14 June 2018, it has paid approximately $12 million in compensation to clients impacted by Mr Sinha's poor advice and ongoing advice service failures.
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
