Perhaps as a reaction to the drubbing that it has received lately at the hands of Australia's financial Royal Commission, the Australian Securities and Investments Commission has embarked on proceedings in a federal court against the banking giant Westpac in relation to alleged poor financial advice.

The regulator has singled out Mr Sudhir Sinha, one of Westpac's former financial planners, as the source of the allegedly bad advice. In court documents, it alleges that, in four sample client files that it selected, Mr Sinha failed to honour his 'best interests' duty under the Corporations Act, provided inappropriate financial advice, and failed to follow the interests of his clients.

Mr Sinha provided financial advice in the Perth area as an employee of Westpac between 2001 and 2014. In June 2017, ASIC banned him from providing financial services for a period of five years as a result of his failure to meet his "advice service obligations."

ASIC contends that, as Mr Sinha's responsible licensee during that period, Westpac is liable for the advisor allegedly flouting his 'best interests' obligations under section 961K. ASIC also alleges that Westpac contravened ss912A(1)(a) and (c), which require it 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.

Section 961K is a civil penalty provision and attracts a maximum penalty of A$1 million (US$744,000) per contravention.

Westpac has a significant remediation programme underway in respect of Mr Sinha’s conduct and has paid approximately A$12 million (US$8.93 million) in compensation to clients who allegedly fell foul of Mr Sinha's poor advice.

The proceeding is listed for a directions hearing in Sydney on 19 July.