ASIC has commenced proceedings in the Federal Court of Australia against Westpac Banking Corporation in relation to alleged poor financial advice provided by one of its former financial planners, Mr Sudhir Sinha.
Following an ASIC investigation, Mr. David St Pierre, a former Westpac Home Finance Manager, has been sentenced in the Southport District Court to 3 years imprisonment, to be released after 6 months on a recognisance order.
On 2 November 2016, Mr St Pierre pleaded guilty to three counts of dishonest use of his position, with the intention of directly or indirectly gaining an advantage for himself or others.
ASIC alleged that between July 2008 and June 2010, Mr St Pierre dishonestly used his position and submitted loan applications for approval when he knew they contained false information and false documents.
Mr St Pierre obtained over $2.5 million for Westpac customers, that they invested with a now failed Tasmanian property development scheme, operated by Capital Growth International Club Pty Ltd (CGIC) and All About Property Developments Pty Ltd (AAPD) (refer: 15-137MR).
In delivering the sentence, Judge Kent QC remarked that Mr St Pierre's behaviour was described accurately in his opinion by the Crown as calculated, elaborate, determined and not a fleeting mistake.
ASIC Commissioner Peter Kell said: "Mr St Pierre's actions betrayed the trust of his clients and caused them significant financial harm. This sentence showed such behaviour will not be tolerated.'
The matter was prosecuted by the Commonwealth Director of Public Prosecutions.
Mr St Pierre's recognisance is in the sum of $1000, conditioned that he be of good behaviour for a period of 3 years.
ASIC's investigation found that the customers to whom the loan applications related were elderly and vulnerable and with limited financial means, yet in spite of this, Mr St Pierre encouraged them to borrow against their homes, some of which were unencumbered, to invest with CGIC and AAPD, which promised returns of 12–20% per annum.
The customers received monthly interest payments from CGIC and AAPD after they invested, however the interest payments stopped shortly before a liquidator was appointed on 28 February 2011. This left customers without sufficient income with which to repay their loans to Westpac.
Westpac has compensated customers who obtained loans from Westpac through Mr St Pierre in relation to amounts they invested in CGIC. Westpac has also compensated investors who did not borrow funds from Westpac but claimed to have had some direct contact with Mr St Pierre before making their investment in CGIC. ASIC acknowledges Westpac's commitment to achieving a resolution for the benefit of CGIC investors. (refer: 14-264MR).
In March 2014, ASIC permanently banned Mr St Pierre from engaging in credit activities and providing financial services (refer: 14-043MR).
ASIC'S investigations into CGIC, AAPD and its officers are ongoing.
ASIC has banned Adelaide financial adviser Michael Mahoney from providing financial services for a period of four years.
Mr Mahoney was employed by the BT Financial Group Pty Ltd (BTFG) in the Westpac Scaled Advice Insurance business from October 2013 to July 2014 to provide general advice only to retail clients on insurance products.
ASIC's investigation found that during the period Mr Mahoney was employed at BTFG, he engaged in conduct that was misleading and deceptive. Specifically, he entered false information regarding various clients' health or health-risk factors in telephone applications for insurance policies issued by Westpac Life Insurance Services Ltd (WLIS). This resulted in WLIS issuing policies to clients based on false information and assuming greater risks without having an opportunity to undertake an assessment of those risks.
WLIS has agreed to honour the affected client policies.
ASIC Deputy Chairman Peter Kell said, 'This outcome shows that ASIC expects employees who are providing financial services to maintain high standards and not engage in conduct that is misleading and deceptive.'
Mr Mahoney has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.
This outcome is a result of ASIC's Wealth Management Project. The Wealth Management Project was established in October 2014 with the objective of lifting standards by major financial advice providers. The Wealth Management Project focuses on the conduct of the largest financial advice firms (NAB, Westpac, CBA, ANZ, AMP and Macquarie).
ASIC's work in the Wealth Management Project covers a number of areas including:
- working with the largest financial advice firms to address the identification and remediation of non-compliant advice;
- seeking regulatory outcomes when appropriate against Licensees and advisers.
As part of its Wealth Management Project, ASIC has banned the following advisers from the financial services industry, in addition to Mr Mahoney:
- Damian O'Rourke (refer: 16-318MR)
- Rommel Panganiban (16-309MR)
- Anthony Jason Sourris (16-270MR)
- Sarah Kate Gardner (16-269MR)
- Nicholas Kerr (16-260MR)
- Craig Scott Miller (16-239MR)
- Wayne Meadth (16-188MR)
- Hardik Bhimani (refer: 16-124MR)
- Gerard McCormack (refer: 16-059MR)
- Shane Thompson (refer:16-022MR)
- Ben Rickman (refer:16-006MR)
- Ben Cheung (refer: 16-004MR)
- Mark Tidbury (refer: 15-383MR)
- Amanda Ritchie (refer: 15-294MR)
- Stuart Murray Jamieson (refer:15-288MR)
- Sharnie Kent (refer: 15-286MR)
- Alfie Chong (refer: 15-259MR)
- Martin Hodgetts (refer: 15-218MR)
- Shawn Hickman (refer: 15-213MR)
- Brett O'Malley (refer: 15-121MR)
- Brian Farber (refer: 15-178MR), and
- Rebecca Locksley (refer: 15-070MR).