By Byron Kaye and Paulina Duran
SYDNEY (Reuters) - Australia's securities regulator has filed a lawsuit against No. 2 lender Westpac Banking Corp over a financial planner who it alleges gave poor financial advice for years, escalating the pressure on the country's financial planning industry.
The Australian Securities and Investments Commission (ASIC) on Friday said it filed a Federal Court lawsuit accusing Westpac of failing to act in the best interests of customers, providing inappropriate financial advice and failing to prioritise the interests of clients.
Court documents made public by ASIC showed the regulator was seeking fines and declarations that the Sydney-based bank failed to do everything necessary to provide financial services "efficiently, honestly and fairly".
ASIC said the country's Corporations Act came with a maximum penalty of A$1 million ($746,400) for each wrongdoing, without specifying how many instances of wrongdoing its lawsuit alleged.
While the lawsuit stemmed from just one former Westpac financial planner, ASIC said the bank breached part of the law "which requires Westpac 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".
Westpac said it was reviewing the ASIC case and would continue to co-operate with ASIC to resolve the proceedings as soon as possible.
It said it identified compliance concerns with, and fired, the planner in question in 2014, then "proactively initiated remediation to identify and compensate affected customers".
The lawsuit is the second for Westpac from ASIC this year. Last month, the bank was cleared by a court of allegations levelled by ASIC that it rigged a key rate to boost profit.
Australia's banks are under intense scrutiny as a year-long public inquiry into finance sector misconduct, now in its fifth month, airs almost daily allegations wrongdoing.
The lawsuit brought by ASIC on Friday was not related to any testimony aired at the inquiry so far.
Westpac shares seemed little affected by news of the fresh legal matter. The stock was up 2.2 percent in afternoon trade, outpacing a 1.3 percent rise in the broader market.
($1 = 1.3398 Australian dollars)
(Reporting by Byron Kaye and Paulina Duran; Editing by Stephen Coates and Christopher Cushing)
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