Two Westpac subsidiaries have been ordered to pay a collective penalty of $10.5 million for failing to act in their clients’ best interests.
The subsidiaries – Westpac Securities Administration Limited and BT Funds Management Limited (BTFM) – were ordered to pay a $7.5 million penalty and $3 million penalty respectively by the Federal Court after it found they had breached their best interests duty by providing personal financial product advice when not licensed to do so.
The penalties stem from a case originally brought by the Australian Securities and Investments Commission (ASIC) in December 2016 and heard in court in February 2018.
That case focused on calls to 14 consumers that took place as part of two telephone campaigns where Westpac Securities and BTFM recommended that customers roll out of other superannuation funds into a Westpac-related super account.
According to ASIC, as a result of the campaigns, Westpac increased its funds under management by almost $650 million between 1 January 2013 and 16 September 2016 and more than 30,000 customers deposited funds into Westpac superannuation accounts.
ASIC commissioner Danielle Press said: “Westpac was actively conducting a sales campaign aimed at rolling customers from their existing superannuation accounts into Westpac superannuation products. In doing this, Westpac failed to act in the best interests of their customers.
“Consumers’ decisions about their superannuation are significant long-term financial decisions affecting their retirement income.
“Financial institutions seeking to influence those decisions by providing financial product advice must comply with the law designed to protect consumers.
“The penalty of $10.5 million handed down related to calls made to just 14 consumers and should act as a strong deterrent to any entity breaching these provisions of the law.”
An initial decision in the case was handed down in December 2018 when the Federal Court found Westpac Securities and BTFM breached obligations under the Corporations Act to act honestly, efficiently and fairly, but that ASIC did not make out its case that personal advice was provided to the customers.
This outcome was reversed in October 2019 by the full court of the Federal Court, which unanimously found personal advice had been given to 14 customers and was confirmed unanimously by the High Court after Westpac Securities and BTFM appealed the previous ruling.
