(Adds comments from Insignia, ANZ) Feb 3 (Reuters) - An...

(Adds comments from Insignia, ANZ)

Feb 3 (Reuters) - An Australian court has ordered RI Advice Group Pty Ltd, a former unit of Australia and New Zealand Banking Group (ANZ) , to pay A$6 million ($4.28 million) in penalty for "inappropriately advising clients", the country's securities regulator said on Thursday.

The action relates to a case where the Australian Securities & Investments Commission (ASIC) alleged that RI Advice failed to prevent and penalise the conduct of its former financial advisor, John Doyle, while advising on investments in complex financial products.

The court said RI Advice did not have the internal mechanisms to bring to notice and penalise such conduct of a financial adviser at the time.

Doyle was an authorised representative of RI Advice between May 2013 and June 2016. The firm was an ANZ financial advice business until 2018, when it was acquired by Insignia Financial Ltd (IFL) .

Australia's lenders and financial institutions have been under intense scrutiny since a 2018 Royal Commission inquiry found widespread shortcomings in the sector, forcing companies and regulators to take swift action.

The commission had also looked into the conduct of RI Advice and Doyle as a case study on 'bad advice'.

"The A$6 million penalty handed down by the Court against RI Advice sends a strong message to financial services licensees to properly monitor the advice given by their advisers to make sure consumers are protected," ASIC Deputy Chair Sarah Court said.

A spokesperson for Insignia said the court found that the governance standards of RI Advice have improved since the incident and it was not required to appoint an independent expert to review its compliance procedures.

ANZ said it was not a party to the proceedings that began after it had ceased ownership. ($1 = 1.4035 Australian dollars)