The Australian Securities and Investments Commission (ASIC) will appeal a decision by the Federal Court around how the latter has defined the line between general and personal advice under the Corporations Act.
A test case brought by the regulator concerning the provision of advice from two Westpac subsidiaries – Westpac Securities Administration Limited (WSAL) and BT Funds Management Limited (BT Funds) – claimed they provided personal advice when recommending customers roll out of other superannuation funds into Westpac-related superannuation accounts.
ASIC alleged the personal financial product advice was provided during two telephone campaigns, which commenced in 2014, and that WSAL and BT Funds did not undertake a proper comparison of the superannuation funds as required by law. The two subsidiaries are not permitted to provide personal financial product advice under their Australian financial services licences.
In handing down a decision on 21 December 2018, Justice Gleeson found WSAL and BT Funds breached section 912A(1)(a) of the Corporations Act in that their sales process “was contrary to law because those entities had failed to do all things necessary to ensure the financial services were provided efficiently, honestly and fairly”, according to ASIC.
“The court however also found that ASIC did not make out its case that ‘personal advice’ was provided to 15 customers,” the regulator added as part of the announcement regarding its appeal.
“The case was a ‘test case’, being the first time the court has specifically considered s766B of the Corporations Act, which sets out the important dividing line between general and personal advice.”
The regulator added its decision to appeal the court’s decision reflected a “desire to obtain further clarity and certainty concerning the difference between general and personal advice for consumers and financial services providers.”
ASIC deputy chair Daniel Crennan QC said the line between personal and general advice was a key provision within financial services laws and had a direct impact on the advice received by consumers.
“This is why ASIC brought this test case and ASIC believes further consideration by the full court of the Federal Court is necessary to better inform consumers and industry,” Crennan said.
The case commenced on 22 December 2016, at which time ASIC alleged WSAL and BT Funds had breached the best interests duty introduced under the Future of Financial Advice reforms by conducting the sales campaign and providing personal advice in 15 cases.
The regulator also alleged WSAL and BT Funds failed to ensure the financial services covered by their licences were provided efficiently, honestly and fairly; failed to comply with the conditions of their licences, which only permit those licensees to provide general advice; and failed to comply with the financial services laws in the Corporations Act.
