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
Government has introduced a bill to Parliament to legislate the first stream of the QAR reforms.
ASIC now has a 1:1 ratio when it comes to court success in the enforcement of crypto activities and more action is expected as Treasury seeks to introduce a regulatory framework.
A leading governance body has hit out at “specialist interest groups proposing ad hoc law reform” when it comes to reforms of financial services legislation and believes an independent body is needed.
The release of ALRC’s final report into financial services legislation has highlighted financial advice as a “significant” focus as it seeks to reduce costs and help advisers understand their obligations, alongside the Quality of Advice Review.
