Australia’s corporate watchdog has started legal action against Westpac over poor financial advice provided by one of the bank’s former financial planners, Sudhir Kumar Sinha.
Westpac has already paid about $12 million in compensation to clients who were affected by Mr Sinha’s poor advice.
The Australian Securities & Investments Commission (ASIC) contends that Westpac is liable for Mr Sinha’s failure to act in the best interests of his clients whilst an employee of Westpac in Perth from 2001 to November, 2014.
ASIC also claims the bank failed to do all it could to ensure the provision of honest and fair financial services.
ASIC alleges that in four cases selected by ASIC that 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.
ASIC found that Mr Sinha failed to meet his ongoing advice service obligations whilst employed by Westpac
This included a failure to conduct ongoing reviews for at least nine clients who had paid for ongoing advice services.
ASIC found that Mr Sinha was not adequately trained, or was not competent to provide financial services, and was 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.