Westpac Banking Corporation has been ordered to pay A$9.15m (£4.7m, $6.2m, €5.6m) after it failed to monitor and supervise one of its ex-financial advisers.
The Federal Court of Australia said Sudhir Sinha was in breach of best interest duties and, as his employer, Westpac was liable for the civil penalty.
The civil proceedings were brought by the Australian Securities and Investment Commission (Asic) to the federal court in June 2018, after its investigation raised concerns over Sinha’s compliance history, even though he kept receiving ‘high achievement’ ratings from the firm.
He was only dismissed in 2014 by Westpac, which then reported him to the regulator in March 2015.
Tribunal process
Asic said: “The trial took place before justice Wigney in April 2019, during which Westpac admitted that, as Sinha’s responsible licensee, it had contravened the Corporations Act.
“In its decision, the court found Sinha failed to act in the best interests of his clients, provided inappropriate financial advice, and failed to prioritise the interests of his clients, in four sample client files identified by Asic.
“Westpac is directly responsible for the breaches of the best interest obligations by Sinha.”
Asic’s deputy chair Daniel Crennan added that the company failed to monitor and supervise its financial adviser, and this went against best interest principles.
The justice preceding the case said: “Unfortunately for four couples, it was subsequently discovered that the recommendations that Sinha made, and the circumstances in which he made them, were deficient and defective, both as a matter of process and in substance.
“That should not have been a complete surprise to Westpac because Sinha’s less-than-satisfactory conduct as a financial adviser had previously come to the attention of certain senior officers of Westpac as a result of various internal compliance reviews, audits or investigations.”
Some of the failings, the justice added, had already been exposed in a 2010 investigation.
