Australia's corporate watchdog has launched legal action in the Federal Court against Westpac over poor financial advice provided by one of the bank's former financial planners, Sudhir Sinha.
The Australian Securities & Investments Commission (ASIC) contends that Westpac is liable for Mr Sinha's alleged breaches of the Corporations Act and also claims the bank failed to do all it could to ensure the provision of honest and fair financial services.
Westpac has already paid about $12 million in compensation to clients who were affected by Mr Sinha's poor advice.
It's alleged that in four cases selected by ASIC, Mr Sinha breached his obligations under the Corporations Act by providing inappropriate financial advice and failing to give priority to his clients' interests.
Each breach of "best interests" obligations under the Act can attract a fine of up to $1 million.
In 2017, ASIC banned Mr Sinha from providing financial services for five years.
It was also found that Mr Sinha failed to meet his ongoing advice service obligations whilst employed by Westpac, which included a failure to conduct ongoing reviews for at least nine clients who had paid for ongoing advisory services.
He was found to be either inadequately trained or was not competent to provide financial services, which made him likely to breach a financial services law in the future.
The case against Westpac is listed for a directions hearing in the Federal Court in Sydney on July 19.
Share
