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Westpac ordered to pay $9.15 million fine for 22 breaches of Corporations Act

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Christian Fernsby ▼ | December 20, 2019
The Federal Court of Australia has ordered Westpac Banking Corporation to pay a penalty of $9.15 million in respect of 22 contraventions of section 961K of the Corporations Act (the Act), and to pay ASIC’s costs of the proceeding.
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Australia business   Westpac banking corporation
The court case relates to poor financial advice provided by a former Westpac financial planner, Mr Sudhir Sinha, in breach of the best interests duty and related obligations under the Act. Westpac is directly liable for these breaches, which attracts a significant civil penalty, because the law imposes a specific liability on licensees for the breaches of their financial advisers.

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The decision comes as a result of civil penalty proceedings brought by ASIC against Westpac in June 2018 (18-175MR). ASIC’s investigation revealed internal Westpac reviews, including an internal bank investigation in 2010, had raised concerns about Mr Sinha’s compliance history yet he continued to receive several ‘high achievement’ ratings from Westpac. It was not until 2014 that Mr Sinha was dismissed by Westpac and March 2015 that Westpac reported Mr Sinha’s conduct to ASIC.

The trial took place before Justice Wigney in April 2019, during which Westpac admitted that, as Mr Sinha’s responsible licensee, it had contravened the Corporations Act. The exact number of contraventions and penalty that should be imposed were contested by ASIC and Westpac.

In its decision, the Court found Mr 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 interests obligations by Mr Sinha under section 961K of the Act.