The corporate regulator has commenced civil proceedings against Westpac over poor financial advice provided by a now-banned adviser.
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.
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