Westpac has been fined $9.15 million by the Federal Court after one of its financial advisers gave inappropriate advice to clients. Corporate watchdog ASIC took the bank to court accusing former Western Australian Westpac employee Sudhir Sinha of breaching the Corporations Act by failing to act in his clients' best interests.
Mr Sinha worked for Westpac in Perth from 2001 to 2014. He gave advice to four couples during 2013 and 2014, recommending they take out superannuation or insurance products or policies with companies or entities associated with Westpac.
"Both Westpac or its associated companies and, indirectly, Mr Sinha earned not-insubstantial fees and commissions from the implementation of Mr Sinha's recommendations," Justice Michael Wigney said in handing down his findings.
The Federal Court found Mr Sinha contravened the Corporations Act 22 times. Justice Wigney ruled Westpac was responsible because it failed to make sure Mr Sinha acted efficiently, honestly and fairly. As the facts of this case reveal, that rather cosy arrangement turned out to be fruitful for both Mr Sinha and Westpac, but not always for their clients.
However, he found ASIC failed to prove Westpac's senior managers actually knew about the risks posed by Mr Sinha. Westpac fired Mr Sinha in November 2014. This was considered a test case of the extent to which financial services licensees, such as banks, are responsible for the conduct of advisers.
In 2017, ASIC banned Mr Sinha from providing financial services after finding he "systematically failed" to meet his obligations over six years. The 2017 ASIC investigation found 177 clients were charged fees but did not receive service from Mr Sinha, including at least nine clients who did not receive reviews despite paying for ongoing service.
The regulator also found Mr Sinha was not adequately trained or competent and banned him from providing financial services until June 2022.
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