Financial Planning

ASIC wins appeal in personal advice case

ASIC Westpac personal advice

The full Federal Court has ruled superannuation rollover advice provided by Westpac subsidiaries was personal in nature and a breach of their licence.

ASIC has won an appeal against two Westpac subsidiaries over their provision of advice, which the corporate regulator claimed was given as personal advice and so breached their licence conditions and the best interests duty under the Corporations Act.

The regulator announced its appeal was upheld by the full Federal Court today and related to two telephone campaigns conducted by Westpac Securities Administration Limited (WSAL) and BT Funds Management Limited (BTFM).

ASIC claimed that during those campaigns, WSAL and BTFM provided personal advice when recommending customers roll out of other superannuation funds into Westpac-related superannuation accounts, but this claim was rejected by the Federal Court in a decision handed down on 21 December 2018.

In February, it stated it intended to appeal the court’s decision regarding the meaning of ‘personal advice’ in the Corporations Act, including its finding that WSAL and BTFM did not provide personal advice to 15 customers during the campaigns.

It said the full court reversed that decision and found that in calls to 14 customers, Westpac staff provided personal advice in breach of WSAL and BTFM‘s Australian financial services licences, and by doing so failed to comply with other financial services laws in the Corporations Act, including the best interests duty.

The court also dismissed a cross-appeal by WSAL and BTFM, which ASIC stated affirmed its findings the two subsidiaries, by engaging in the sales campaigns, had failed to do all things necessary to ensure the financial services were provided efficiently, honestly and fairly.

The regulator stated today’s unanimous decision by the court “provides clarity and certainty concerning the difference between general and personal advice for consumers and financial services providers”.

In making the decision, Justice Michael O’Bryan, one of three judges to hear the matter, said: “The telephone campaign was directed to persons with whom Westpac had an existing relationship and in a real sense occupied a position of trust with respect to the customer’s superannuation fund.

“Despite knowing that the decision was not straightforward, Westpac did not advise its customers about the matters that they should consider before deciding to consolidate their superannuation. Nor did Westpac even suggest to its customers that they reflect on the decision or seek advice about the decision.

“Through the campaign, Westpac pursued its own self-interest and disregarded the best interests of its customers.”

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