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Royal Commission superannuation hearings - Live Coverage:

Major bank in hot water over alleged ‘inappropriate financial advice’

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One of Australia’s big four banks is under fire from the corporate regulator for providing allegedly poor financial advice and failing to put clients’ interests first.

The Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against Westpac, claiming one of its former financial planners, Sudhir Sinha, alleged provided poor financial advice.

The court documents filed on Thursday said Mr Sinha allegedly contravened the “best interests” duty in the Corporations Act and failed to “prioritise the interests of his clients”, while providing inappropriate advice.

Mr Sinha worked for Westpac from 2001 to November 2014 but was banned in 2017 for five years by ASIC from providing financial services after failing to meet ongoing advice obligations.

In a statement, ASIC contended, “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.”

Breaches of Section 961K of the Corporations Act can carry penalties of up to $1 million for each contravention.

ASIC acknowledged that Westpac has in place a “significant” remediation program as a result of Mr Sinha’s behaviour.

As of Thursday (14 June), Westpac had paid about $12 million in compensation to impacted clients, ASIC said.

The directions hearing will be held on 19 July 2018 in Sydney.

Major bank in hot water over alleged ‘inappropriate financial advice’
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