Westpac has been ordered to pay more than $9 million in penalties in relation to poor financial advice provided by one of the bank's former financial planners.
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The bank has already paid about $12 million in compensation to clients of Sudhir Sinha who were affected by his failure to comply with the "best interest obligations" when he provided them with advice concerning financial products.
The Australian Securities and Investments Commission took legal action against Westpac in the Federal Court, contending the bank was liable for Mr Sinha's failure to act in the best interests of his clients.
He was an employee of Westpac in Perth from 2001 to 2014.
In the Federal Court on Thursday, Justice Michael Wigney found there were 22 contraventions of the Corporations Act by Westpac, each of which corresponded to a separate contravention by Mr Sinha.
He assessed the appropriate civil penalties for Westpac's contraventions at $9.15 million.
ASIC selected four couples' cases where Mr Sinha breached his obligations by providing inappropriate financial advice and failing to give priority to his clients' interests.
The relationship between the bank and Mr Sinha was structured so he could share in the commissions and fees earned when, as a result of his advice or recommendations, clients signed up for financial products in which Westpac or associated companies had an interest.
"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," the judge said.
The recommendations he made in the four cases turned out to be "deficient and defective".
"That should not have come as a complete surprise to Westpac," the judge said.
"That is because Mr 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."
Westpac admitted breaching various provisions of the act by failing to do all things necessary to ensure the financial services covered by the licence were provided "efficiently, honestly and fairly".
In 2017, ASIC banned Mr Sinha from providing financial services for five years.
Australian Associated Press
