Westpac hit with $9.15m penalty on best interests

Westpac has been ordered to pay a $9.15 million penalty as a result of Federal Court action initiated by the Australian Securities and Investments Commission (ASIC) over poor financial advice.

ASIC announced today that the Federal Court had imposed the penalty in respect of 22 contraventions of section 961K of the Corporations Act relating to poor financial advice provided by a former Westpac financial planner, Sudhir Sinha, in breach of best interests duty and related obligations.

The court held that Westpac was directly liable for the breaches.

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It said the decision came as a result of civil penalty proceedings brought by ASIC against Westpac in June, last year, after an investigation revealed internal Westpac review, including an internal bank investigation in 2010, had raised concern about Sinha’s compliance history yet he continued to receive several high achievement ratings.

ASIC deputy chairman, Daniel Crennan QC noted that Westpac, as Sinha’s responsible licensee, failed to properly monitor and supervise him for a period of time.




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Somewhere behind the scenes in this case there would have been a Westpac middle manager whose substantial bonus was tied to sales of Westpac products. He would have encouraged and rewarded Sinha's behaviour, and he would have bullied or overruled compliance.

And it wouldn't just be this case. It would be thousands of cases across all the big institutions. There is always a middle manager who has the power and the incentive to coerce inappropriate behaviour. But these people are never held accountable. The only individuals ever punished are the front line advisers. This has got to change.

Agree with your allegation about bank managers getting away scott-free while their staff wear the practice. Probably extend the allegation to include senior bank executives who seem to be unsackable no matter what bad deeds have been done.

Seems excessive. Assume similar cases with bad union fund advice (which we've all seen plenty) will get the same treatment by ASIC? Haha that's my little Christmas joke to add festive cheer, we all know they'd never investigate the fund they put their own staff into!!

This may be the start of a run of these, the numbers could get extraordinarily large but for 10M he must have done a lot of damage that adviser.

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