ASIC’s banning of Subeer Luthra follows a surveillance it did in relation to his conduct when he was an authorised representative of Westpac, according to a statement.
Westpac notified ASIC of Mr Luthra’s misconduct. ASIC’s subsequent review of Mr Luthra’s advice found that he advised his clients to switch their superannuation to a product issued by BT, and to obtain comprehensive personal insurance, without taking their needs and objectives into consideration.
Further, he also recommended BT insurance and superannuation products to all his clients without adequately investigating their existing financial products.
ASIC said the inappropriate advice resulted in Mr Luthra’s clients paying excessive insurance premiums that eroded their superannuation contributions at a point in their lives when they did not have enough time to rebuild their assets for retirement.
It added that Mr Luthra prioritised his own interests over those of his clients by providing inappropriate advice that maximised the amount of fees and commissions payable to Westpac and himself.
ASIC also found that Mr Luthra was not of good fame or character to provide financial services because his conduct was dishonest and deliberate, and motivated by personal enrichment, and determined that Mr Luthra was not a fit and proper person to engage in credit activities.
Mr Luthra dishonestly manipulated his clients’ aims and objectives and prioritised his own interests over theirs, ASIC said.
“The failure of financial advisers to act in the best of interests of their clients, or to prioritise their clients’ interests over their own, erodes public trust in financial services professionals and affects the financial system as whole. Individual advisers have a role to play in rebuilding that trust,” said ASIC commissioner Danielle Press.
“ASIC expects financial advisers to uphold the values of integrity and professionalism. Conduct that results in harm to consumers will not be tolerated.”
The banning of Mr Luthra will be recorded on ASIC’s Financial Advisers Register and the Banned and Disqualified Persons Register.
Mr Luthra has the right to appeal to the Administrative Appeals Tribunal.
I worked in the same team as this character and our respective manager at the time called him an “exceptional financial adviser.” This just goes to show that the problem is not so much the Adviser but the management.
A little birdie recently told me that this same manager is now applying to mange an advice remediation team (I.e. they will be charged with compensating consumers who received bad advice from.the big four). What a joke! The entire system is a joke!
ASIC has to go after the middle to senior management (including the senior executives all the way up to the CEO). They created this bad culture! Anything less than that is pure window dressing !
[quote=Anonymous]Clearly this type of behaviour should be stamped out.
But I’m curious.
How did the clients sign off and proceed with all of this, if it is clearly not suitable for them?
Implementation is not a simple process and requires a reasonable level of client engagement, does it not?
Or is it, more simply, that the adviser seems to have taken advantage of clients’ lack of financial literacy?[/quote]
They were told it was suitable for them. By a person they’re paying to give them advice. That’s why people seek advice. Obviously they were taken advantage of.
[quote=Anonymous]I could not count the number of times Westpac para-planning requested I change a verbatim client goal to fit ‘compliance’ & the arguments that ensued. I think the Advisor’s conduct must be viewed in the context of the environment he was working. Westpac encourages & tolerates results at any price until it becomes inconvenient, then under the bus you go[/quote][quote=Anonymous]I could not count the number of times Westpac para-planning requested I change a verbatim client goal to fit ‘compliance’ & the arguments that ensued. I think the Advisor’s conduct must be viewed in the context of the environment he was working. Westpac encourages & tolerates results at any price until it becomes inconvenient, then under the bus you go[/quote]
Which is it? Was compliance too strict or does Westpac tolerate results at any price?
Didn’t Westpac only have BT on their Approved Product List until recently? Makes it hard to recommend anyone else.
I worked at Westpac during Luthra’s tenure and everyone knew he was a crook, yet management turned a blind eye. He made conference twice and was put up on a pedestal as an exemplar. He was even seconded into a regional manager role and ran induction for new planners. The state manager and RM at the time loved their bonuses based in part on his commercial output. They should be held to account! I believe they are still in the industry working at Macquarie. Luthra was a crook but they are just as culpable.
Westpac Benifitted by by Mr Luthra’s actions directly or via BT. What is the punishment meted out to By / Westpac?
Identified well before the RC (3 years ago).
Every person around him knew his behavior – Investigated, remediated and reported to ASIC.
WE NEED ETHICS EXAMS AND ETHICS TRAINING FOR MANAGEMENT
I could not count the number of times Westpac para-planning requested I change a verbatim client goal to fit ‘compliance’ & the arguments that ensued. I think the Advisor’s conduct must be viewed in the context of the environment he was working. Westpac encourages & tolerates results at any price until it becomes inconvenient, then under the bus you go
I’m not saying this practice isn’t wrong BUT ASIC need to go higher up the food chain. This guy would have been set targets to do this for gods sake. He would have been trained and encouraged to do it !! Same with AMP, COM advisers etc, etc.His actions may be wrong and naive but is he the main or only culprit? Of course not.
Its always the advisers thrown under the bus and ASIC not doing anything against execs of the insto’s (no doubt who will be giving ASIC execs jobs when they leave!).
I am so sick of ASIC not doing the right thing and taking historic action again insto execs who were the main culprits.
How on earth is the Australian Super offer of giving 20,000 Qantas points to new members who contributes a minimum of $350.00 to their account not assessed as a non related incentive designed to seek to influence a purchasing decision (becoming a member) and not based on an assessment of the customers current position or needs ??
Are frequent flyer points, as a benefit of a superannuation fund designed for the sole purpose of providing an appropriate investment vehicle for members retirement monies an acceptable benefit directly related to the accumulation of monies for the purpose of retirement ???
Oh, I know…they cover themselves by making a statement that the potential new member needs to seek advice
as to whether joining Australian Super is suitable for them.
So, if a potential new member were to contact an Australian Super employed adviser and ask what to do, how often would that adviser not recommend that person consider joining Australian Super ??
The carrot of the additional Qantas points is very obviously designed to influence people to join for a reason not related to the purpose of superannuation.
So, do you reckon ASIC would seek to investigate this matter following their appointment of Australian Super as the default fund for new employees ?
Do these new members from ASIC accrue the 20,000 Qantas points and do ASIC choose to fly Qantas ???
What an intricate web of conflict and influence that has developed in the superannuation space.
Super funds have become marketing monoliths all thinking of the next incentive driven option to secure new members and to gain increased market share, FUM and power.
Good Riddance, Shame on you Luthra…a blight to the profession
……..really?
I have worked in banks for years and am not with an ADG and to is plain vanilla to recommend in house product. I have explicitly been told I have to ‘support the house’ more. When I have asked about conflcted issues (like having the investment office, recommend in house funds – I have been scoffed at). Perhaps all of AMP and other large ADGs would be guilty of this,
Poor bugger has an odd surname ..so have been hung out to dry by Westpac and ASIC..
He was even ‘training’ new advisers for a period of time. Management knew he was engaged in this behaviour but did nothing because his revenue made sure they go their bonus.
Good Riddance, Shame on you Luthra…a blight to the profession
Vertical integration of advice and product is rife within the Industry Super Funds on a daily basis.
Advisers are salaried employees of the fund and are therefore answerable to the fund they represent and the entity that pays their salary.
Even though they may claim they have the “ability” to place business outside their fund, it needs to be assessed exactly what percentage of advice provided to fund members recommends an alternative option either in accumulation, pension or insurance cover that is not directly associated with the fund that employs the adviser.
This is absolutely no different at all to the old sole agency model within National Mutual, AMP, Colonial, Prudential etc where the advisers held a single agreement (or Authorisation) for that company and recommended that company’s product.
Admittedly the BID did not exist at that point and so the restricted recommendation was acceptable, however, in practice this model does not appear to be very far away from the vertically integrated models of today.
As much as ASIC appear to be very hesitant to open up the Industry Super Fund model for an overwhelming fear of how they would address the issues, it is only right this is done in full and at the earliest possible opportunity.
Otherwise, it is blatantly clear this is a 2 rule program, where one sector is treated differently to another and that is not acceptable at any level.
Its great that Westpac reported him. Well done. Pillar of society
I’m curious to know something, what insurance and superannuation products are on the APL of CBUS, Australian Super, HOST Plus, HESTA and all the other ISN’s? Surely they wouldn’t be recommending or ever using third-party products yet this is OK with ASIC? How is a watered down group insurance policy with an ISN always approriate for every member of the fund? Is the group insurance amount adequate cover? Why is the spotlight ALWAYS on retail advisers? Not once in my 15+ year career have I ever seen ASIC conduct surveilance or punish advisers operating under the Industry Super Fund umbrella – but alas! Why would these funds be subjected to any scrutiny at all when Danielle Press, the “ASIC Commissioner” was a senior adviser and member to (drum roll please…………………….) AUSTRALIAN SUPER!!!
Well call me blind freddy!
Westpac adviser recommending BT products from a restricted APL. Coincidence much?
All is well- everyone is killing the KPIs. Subeer is doing as he’s been told and everyone is happy……….. and then a sacrificial lamb is required post RC.
IFA, we’d all love to hear the advisers side of the story as we know the banks and ASIC have their own version of the truth and it’s usually not correct.
Is it still possible to be a “financial planner” and work under a product manufacturer or even work for a licensee that has any association with a product… I don’t think so….if you are then you’re frigging crazy and you’re creating a ticking time bomb for yourself.
Westpac must be accounted for their loss and make it good by compensating them in full.
The saddest part about all this is that it has been known that BT previously had only BT products on their APL for years. If ASIC didnt know this, what have they been doing. The ‘one off approval’ process to use a product from any other provider was apparently borderline impossible.
This is the bank financial planning model and has been for ages. This is why vertical integration needs to go.
Guess he was a star for them but now that they are exiting advice he is no longer required.
I am liking the line you are going down Really? Don’t stop at the planner. If ASIC is serious, keep going up the food chain and then you will make some real headway into changing things
This guy deserves to be pilloried. BUT what of his “employers”. Where were his AUDITORS, and COMPLIANCE people? Wallowing in the bonuses he created for himself and his upline management? Did anyone check his SOAs,. or were they waived through because he was a big producer. This reminds me of the old “tied office” days when “tombstoners” would be lauded as heroes for at least 12 months; be a star at conferences etc, before sales managers asked questions. Come on ASIC, SACK SOME MANAGERS
Clearly this type of behaviour should be stamped out.
But I’m curious.
How did the clients sign off and proceed with all of this, if it is clearly not suitable for them?
Implementation is not a simple process and requires a reasonable level of client engagement, does it not?
Or is it, more simply, that the adviser seems to have taken advantage of clients’ lack of financial literacy?
“he also recommended BT insurance and superannuation products to ALL his clients”
With all these product sales, and 100% share of wallet (SOW), imagine how good the bonuses would have been to the Westpac;
– Practice Development Manager
– Regional Manager
– State Manager
I bet they weren’t complaining! I might have a look and see who those Westpac staff were at the time.
No monitoring and supervision. Shame, Westpac, shame!!
Well you better round up every ISA industry fund ‘planner’ and start banning them for exactly the same conduct.