Will the Westpac High Court decision change intra-fund advice?

Questions are being asked about the extent to which superannuation funds will need to more closely tailor their intra-fund advice offerings following the High Court’s decision which clearly defined the difference between “general” and “personal” advice.

The High Court provided that clarity by dismissing an appeal by Westpac against a Full Federal Court decision that the bank breached the Corporations Act by actively conducting a sales campaign aimed at rolling customers into Westpac products.

Westpac claimed the conversations between its personnel and the superannuation fund members fell within the framework of general advice. The High Court disagreed and upheld the view that it falls under the heading of personal advice.

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In the words of ASIC Commissioner, Danielle Press “By clarifying the distinction between tailored, quality, personal advice in the customer’s interest, and general advice given via a sales campaign, today's judgment will provide clear guidance to those financial institutions that develop campaigns to sell financial products through direct approaches to retail clients”.

However, on ASIC’s current interpretation of intra-fund advice, the High Court’s decision may not be relevant, with the regulator having said that it regards intra-fund advice as limited personal advice. What is more, it has stipulated that Section 99F of the Superannuation Industry (Supervision) Act 1993 specifies that “intra-fund advice cannot cover advice on whether a member should consolidate their superannuation holdings into one account”.

A key finding in the High Court judgement was that there was a pre-existing relationship between each member and Westpac and that the bank already held some of the members’ superannuation.

“Westpac gave financial product advice to each member which was intended to influence them in making a decision in relation to a particular financial product, namely, membership in one of the Funds, in circumstances where a reasonable person might expect Westpac to have considered one or more of the member's objectives, financial situation and needs,” the High Court decision said.

“The subject matter of the advice, the nature of the relationship between Westpac and its members, the purpose and tenor of the calls, and the members' objectives, together with the form, content and context of the financial product advice seen in light of a number of other considerations, compel the conclusion that the financial product advice was personal advice within the meaning of s 766B(3)(b).”

“…where a provider of advice urges the recipient to follow a particular course of action, there is a greater likelihood that a reasonable person might expect the adviser to have considered the recipient's personal circumstances. This observation applies with particular force in the present case, where: the course of action concerns a subject matter of significance to most members (being the consolidation of multiple superannuation accounts); there is a pre-existing relationship of dependence between the adviser and the member (that of trustee and beneficiary),” it said.

“The adviser elicited the member's objectives; and once having been told them, the adviser confirmed those personal objectives through the use of social proofing as being common and relevant objectives.

“As has been said, those circumstances would have conveyed to a reasonable person not only that those personal objectives were considered, but that no other matters needed to be taken into account and no other advice was required before the member made a decision to accept the recommendation and roll over their external superannuation accounts.”

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Good article, Mike and thanks for sharing the High Court info. This has been going on for decades, but really accelerated when the large institutions started running product and advice under one umbrella. This has not stopped post-RC but simply donned another mask. Intra-Fund advice is the wedge being driven through the advise profession to let the very organisations that caused the RC in the first place get their funds under management market back without having to worry about those pesky advisers. Attn: ASIC. It's all happening again under a different hat, these institutions have learned nothing. You cannot penalise a listed company as it's shareholders that pay the penalty, you need to go after the directors and managers.

Good one ASIC. I do some pro bono work for people with terminal illnesses and have noticed over the last couple of years a sharp increase in individuals who have lost their insurance cover through these direct sale campaigns. It's a sobering experience to have to tell someone that the half million in terminal cover they had up until last year was lost when they clicked the button on an Industry Fund webpage or said yes to a bank teller suggesting they could save by consolidating their super. The more things change the more they stay the same.

To start the “General Advice” term must be outlawed. The term itself implies a person is receiving Advice relative to themselves. It is Product Information and must be changed to such.
As for Industry Super, their General Advice / Sales & Intra Fund Advice / Sales owned networks will be able to carry on breaking the same and many other laws.
Come on folks, We should all know by now that ASIC will NEVER DO ANYTHING AGAINST INDUSTRY SUPER. Never !!!!!!
Industry Super and ASIC are the most pure example of Regulatory Capture Corruption.
Disgustingly CORRUPT is ASIC !!!

Intra fund advice is a red herring. It is usually given by licensed advisers in compliance with the law.

The real issue is personal advice to switch/consolidate super funds, being given by unlicensed sales reps and call centre staff. The super funds call it "marketing" or "customer service" but in most cases it is actually personal advice. Most retail funds stopped doing this long ago, but it is still standard practice for union funds, who know ASIC will never enforce the law against them.

So if ASIC consider intra fund advice to be Limited Personal Advice, then where are all the Limited SOA's/ROA's everytime their call centres give advice? They don't exist, therefore they must be in breach. ASIC should be reviewing the phone transcripts and determining if Limited Personal Advice is being given, and then request the file notes and the SOA's.

ASIC is corrupt.

They are clearly biased towards unionised industry super, and will always be a protected species especially when providing 'intrafund' advice regardless of what real financial planners are required to do or endure.

Does anyone know if ASIC have reviewed super fund phone centre recordings since 2018 to ensure they are compliant?

Yes, the Industry Fund movement were pretty much behind the Royal Commission.

Yes, because of the Royal Commission the banks have exited the advice space.

Yes, in the past there have been conflicts of interest between product providers and advisers within the same product provider.

Yes, these conflicts remain within the intrafund space primarily within the Industry Fund space.

Yes, this whole issue is a complete mess.

The answer:

1. Clearly define what advice actually is (get rid of all the variations), and

2. Completely segregate Advice providers from Product providers.

It will be a massive job but perhaps a step in the right direction for the long term viability of the advice industry.

The question has to be asked, when will ASIC shadow shop the union funds and see that what they are doing is no different to what they dragged Westpac to court for. Until they do they continue to prove how corrupt and biased they are. If they did the smallest amount of investigation the union funds would be found out, you know what they say from little things big things grow.

All the industry fund marketting should be caught under this...

It is a blatant attempt to sell consolidation of benefits under the guise of "Lower fees, "no commissions to hungry advisers" etc, with a "real actor" explaining you'll be better off for doing so". Don't tell me there is a disclaimer... the 2 second 1pt font which appears without anybody being able to read it is not a proper warning. There needs to be a realistic 30% of the screen warning given for the entire duration of the ad, similar to the warnings on cigarette packets, with pictures of disabled people in destitute situations and people laying in coffins, to indicate that the saving of fees is not the only thing to consider.

Targeted marketing with the intention of a predetermined outcome... "C'mon, it's never too late to change". --We're going up... somewhere!!!!

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