ASIC has initiated civil penalty proceedings against Westpac in relation to a Perth financial planner whose poor advice has already seen the bank foot a $12 million bill to remediate clients. Sudhir Sinha provided financial advice in the Perth area as an employee of Westpac between 2001 and 2014 before the bank dismissed him. Westpac identified compliance concerns in Sinha's advice and in June 2017, ASIC banned Sinha from providing financial services for a period of five years as a result of his failure to meet his ongoing advice service obligations.
On Thursday the corporate regulator presented the court with four sample client files where Sinha allegedly breached "best interests" duty under the Corporations Act, provided inappropriate financial advice and failed to prioritise the interests of clients - misconduct that ASIC now wants to hold Westpac liable for.
"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 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," it said in a statement.
A directions hearing is listed for July 19 in Sydney. Section 961K of the Act is a civil penalty provision, and attracts a maximum penalty of $1 million per contravention.
Westpac said it is reviewing the documents that ASIC filed in the court.
"In May 2014, Westpac identified compliance concerns with the former financial adviser, Mr Sudhir Sinha, through the use of its proprietary data analytics tool, Planner Risk Insights. Following detection, Westpac commenced an investigation, suspended Mr Sinha in September 2014 and subsequently dismissed Mr Sinha in November 2014," Westpac said in a statement.
Westpac has reported to ASIC that, as at 14 June 2018, it has paid about $12 million in compensation to clients impacted by Sinha's poor advice and ongoing advice service failures.
It said it has also made improvements to its risk management and compliance controls in its financial advice business, building on the capabilities which detected Sinha's conduct.This article was first published by https://www.financialstandard.com.au
Author: Kinika Sood