ASIC wins appeal on personal advice

28 October 2019

The corporate watchdog has won an appeal against Westpac Securities Administration (WSAL) and BT Funds Management Limited regarding the definition of “personal advice” in the Corporations Act.

In an announcement, the Australian Securities and Investments Commission (ASIC) said it appealed the Federal Court’s decision that stated WSAL and BTFM did not provide personal advice to 15 customers in two telephone campaigns conducted by members of Westpac’s Super Activation Team.

The court today found that 14 of those customers were provided with personal advice, meaning WSAL and BTFM failed to comply with the financial services laws in the Corporations Act, including ‘best interests’ duty, and beached their Australian Financial Services (AFS) Licences.

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ASIC said it welcomed the decision by the Full Court as it provided clarity and certainty surrounding the difference between general and personal advice for consumers and financial services providers.

“While unanimous in their decision, the members of the Full Court delivered separate reasons with Justice Jagot describing Westpac’s conduct as ‘systemic sharp practice about what must have been one of their clients’ major financial concerns, their superannuation’,” the announcement said.

Another comment from Chief Justine Allsop said: “Westpac attempted, assiduously, to get the customer to make a decision to move funds to BT without giving personal financial product advice as defined in the legislation. It failed”.

Justice O’Bryan said Westpac took unfair advantage of the asymmetry by implementing a carefully crafted telephone campaign.

The Full Court dismissed WSAL and BTFM’s cross appeal which affirmed the Federal Court’s finding that the two firms had failed to do all things necessary to ensure the financial services were provided efficiently, honestly, and fairly.

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Scary result for any super fund that relies on general advice.

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