In a statement, ASIC said it has filed documents in the Federal Court that allege former Westpac adviser Sudhir Sinha breached the best interests duty, provided inappropriate advice and failed to prioritise his clients’ interests during his time with the bank.
Mr Sinha was an employee of Westpac from 2001 until November of 2014, when he moved to Synchron until his banning in June 2017.
“ASIC contends, as Mr Sinha’s responsible licensee during that period, Westpac is liable for the alleged breaches of the ‘best interests’ obligations by Mr Sinha under section 961K of the [Corporations Act],” the regulator said in a statement.
“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.”
Contraventions of the best interests duty can attract penalties up to $1 million for each breach, ASIC said.
“Westpac has a significant remediation program underway in respect of Mr Sinha’s conduct. Westpac has 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,” the regulator added.
Mr Sinha’s conduct was previously a topic of conversation for the parliamentary banking inquiry in October 2017, with Coalition MP and inquiry chair David Coleman grilling Westpac chief executive Brian Hartzer over the matter.
This is a civil case. if ASIC wins who gets the damages, client or the ASIC coffers????
This case is the tip of the iceberg at Westpac. They have a history of employing advisers that have been dismissed from other AFSLs and preferring salesmen over properly qualified professionals. This will cut deep.
I guess everyone has forgotten about the first ASIC best interest landmark case.
https://asic.gov.au/about-asic/media-centre/find-a-media-release/2017-releases/17-100mr-federal-court-declares-melbourne-licensee-breached-fofa-laws/
While I’m not overly fussed if they take civil action. If Westpac has already remediate this what’s the point?
Civil action really means nothing other than compensation for victims.
ASIC have already got the ability to fine so this seems like a pointless excercise
The $110 Billion Australian Super Fund has 1.2 million members but only employees 30 Financial planners, perhaps industry funds have a different attitude to annual reviews?
Warned the Bank about this guy!! They did nothing for about 10 years. As long as he was making money it was condoned. Now the customers will pay. Good on you WBC
what a joke.
Not good enough ASIC. You lazy, useless RDO taking public servants still haven’t got a clue on what’s going on in this industry have you. You cherry picking scalps that stand out like sore thumbs.
How about you stop, take a good look around and reinvent yourselves.
You are missing the biggest con and the biggest rort of all which is the FEE FOR SERVICE nonsense that these advisers are peddling and hoodwinking their clients into taking up. The so called on going service is nothing more than elevator speeches and hand holding while the real work is already paid by the clients via the underlying fund manager, lic or etf each year. The adviser is simply naval gazing and providing motherhood statements while they pretend to be the manager of the money. They simply advised on the initial set up and if done well according to their age and requirements it does not need the yearly charade at 75 basis points or more pa.
WAKE UP ASIC. Get out of the constant meetings and coffee cup holding and get out there and save the thousands of retirees, mums n dads and clueless workers a small fortune by stamping out this nonsense.
Advisers and planners must change their business model now and charge for advice given not this take it out monthly regardless rubbish that’s going on now.
Cue the worst offenders with the most to lose………
I think it is time to end this ridiculous and insulting notion that our clients are stupid fools, who are hoodwinked into paying ongoing fees. FOFA has been in place since 2013. So all existing clients have received at least 4 Fee Disclosure Statements by now and new clients re-consider their ongoing fees and re-sign every 1-2 years. In my practice, we haven’t lost a single client as a result of FOFA and other advisers I speak to report the same thing. The most common job titles among my client base are IT professionals and accountants.They are smart people. I also have former financial planners and bank managers as clients. They know the way our profession works and they are happy to pay fees because they understand the value of our service. I think it is time for the knockers to move on and find something else to complain about. If Steven’s comments were true, the financial planning profession would have been decimated by FOFA. But it hasn’t been, which is a testament to all of the hard work and good service being delivered by the vast majority financial planners in this country!
Well said Steven, I read your wise words Steven and thought I’d give it a go. I spoke to a client about ending our advice relationship. I was charging an annual fee of $800. She started crying and has already sent me an email to reconsider, saying she could not possible look after Centrelink, speak to a Call centre re her investments, more so it was the annual cashflow meetings and always being there for her. She especially said we couldn’t part whilst also undergoing her Cancer Treatments. However I remember your comments and yourself being my mentor, I stood my ground. Now when she comes in for advice I’ll have to charge a SOA fee for the once off advice, starting at $2,000 plus.
I feel sorry for all the advisors out there who cannot make a living because of a pack of. Liars hope you all get to join another licensee my advice is to join a small company who can trust best of luck
The watchful eye I would suggest would be the middle managers, practice managers, state managers, regional managers, heads of wealth and financial planning planning. They all turned a blind eye or even encouraged this behaviour as the revenue streams underpinned their own sales targets and made them look good so they could move on to the next big thing. Their shelf lives very always limited but no one seems to talk about these faceless people who never seem to be prosecuted or brought to accountability. Not even in the Royal Commission.
How does ASIC go from a simple penalty of requiring advisers to be members of the FPA/AFA to now taking them to Court? We’ve seem to go from one extreme to the other. If this is the system that the regulator has to spend millions in court fees to send a message, then the system if flawed. It’s a licensing system. When I went through the red light I didn’t go to court. I could have if I wished to appeal. I either coped a fine or had my license suspended for a period of time. I also didn’t negotiate to be a member of some Association either. The regulator should be allowed to just ban them for a month, or fine the pricks a Squillion million dollars and be done. A squillion is lose change anyway.
the licensing system is flawed. period. can you not see the ongoing issues, they are the one and the same time and again. what did Einstein say about doing the same thing and expecting a different result ? yeah that
sorry correction, synchron IS the next dover
Publish your name if you have the courage of your convictions which I suspect you do not.
$12mill? What did he do??
According to ASIC (17-178MR 8 June 2017) and on the public record he systematicaly failed to meet ongoings service obligations over 6 years. 177 clients were charged fees who did not receive service.
Still seems to be a lot missing in that $12mill
Keep watching & maybe hold your breath while you do too! Synchron have far stricter measures in place with their advisers than you can imagine. I know because I’ve been authorised to advise with them since I joined the industry 10 years ago.
Well if you’ve been with since you’ve joined the industry you have nothing to compare it too.
Synchron have grown too quickly and do not have sufficient support in place to supervise there advisers
Joining the anonymous band wagon.
Synchron is turning 20 years, so how does growing to over 450 reps in this time make it growing “too quickly”. Averaging 22.5 reps per year. Where have you been in the industry? Get your facts right.
Bloody banks dragging our profession through the mud. Ban all the banks from financial planning !
Go on, ASIC – we dare you to ban the banks. They’ve repeatedly shown contempt for all but their executives. Nah. You muppets are too scared.
they can’t touch the banks. too big to fail plus the banks can litigate their lights out
I can 100% guarantee you that the % of advisers with bad practice outside of banks is higher than in. I have had extensive experience on. It’s aides of the fence in various roles.
The amount of advisers outside of the bank licensees with no idea staggered me. Some were incapable of performing a simple rollover.
That said any adviser who does the wrong thing impacts on us all and we need to put less effort into sniping each other and move forward
Why do I get the feeling Synchron will be the next Dover….dealer of last resort is never a comfortable posiiton
So the bad advice was conducted under the watchful eye of the bank and you call out Synchron, you must be a very special type of individual to say that
Isn’t that what happend with Dover. The bad advice was done at the watchful eye of AMP or the Banks… the client complained (no watchful eye) and the adviser was booted and they ended up at Dover.