ASIC’s appeal concerned the Federal Court’s decision regarding the meaning of ‘personal advice’ in the Corporations Act, including the finding that Westpac Securities Administration Limited (WSAL) and BT Funds Management (BTFM) did not provide personal advice to 15 customers in two telephone campaigns conducted by members of Westpac’s Super Activation Team.
The Full Court reversed that decision, finding that in calls to 14 of the customers, the Westpac staff did provide them personal advice, in breach of WSAL and BTFM’s Australian financial services licences.
Further, the Full Court also found that WSAL and BTFM, by providing personal advice to their customers, failed to comply with other financial services laws in the Corporations Act, including the ‘best interests duty’.
ASIC said it welcomed the decision of the Full Court, which provides clarity and certainty concerning the difference between general and personal advice for consumers and financial services providers.
Even though the decision was unanimous, the members of the Full Court delivered separate reasons with Justice Jayne Jagot describing Westpac’s conduct as “systemic sharp practice about what must have been one of their clients’ major financial concerns, their superannuation”.
ASIC noted other comments from the judgment, which included:
“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.” (Chief Justice James Allsop at [5])
“Westpac took unfair advantage of that asymmetry by implementing a carefully crafted telephone campaign … 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.” (Justice Michael O’Bryan at [427])
In addition, the Full Court also dismissed WSAL and BTFM’s cross appeal, thereby affirming the Federal Court’s finding that WSAL and BTFM, by engaging in the two sales campaigns, had failed to do all things necessary to ensure the financial services were provided efficiently, honestly and fairly.
The parties are to agree on the declarations and orders to be made by the court. In the absence of agreement, the parties are to make submissions and the court will decide on the declarations and orders.
When most Industry Super Funds dont display their forms to allow a roll-out from their funds on their websites, you know that any contact with them will result in a push to roll-in to their funds.
[quote=Kharen]However, Australian Super starting a marketing strategy where new members receive 20,000 Qantas Frequent Flyer points for contributing $350 is apparently fine! Will they not then ask these new members if they want to consolidate their super?[/quote][quote=Kharen]However, Australian Super starting a marketing strategy where new members receive 20,000 Qantas Frequent Flyer points for contributing $350 is apparently fine! Will they not then ask these new members if they want to consolidate their super?[/quote]
Australian Super call the new Qantas points members to explain all their services and offer Financial Planning Advice which i assume will include a full rollover of all other funds to Australian Super.
However, Australian Super starting a marketing strategy where new members receive 20,000 Qantas Frequent Flyer points for contributing $350 is apparently fine! Will they not then ask these new members if they want to consolidate their super?
Wonder how many of Westpac’s management team will be impacted? Oh wait they stopped providing advice and paid out all their staff in a redundancy. Surely like a ban on financial advisers there should be register for poor management to stop this happening again?
get over yourself James – i have said this a thousand times – Financial Planners are their own worst enemies – you keep wanting blood of your own and this is why the regulators keep on keeping on – have a look at the Mortgage broking industry – they ALL worked together to get a great outcome for their industry – Financial Planners spent a lot of their time bringing each other down – really sad
I wont hold my breath wairing fir ASIC to take any of the industry super funds to court for the very same thing they’ve chased westpac for…p
For Jaded below — Accountants don’t rely on general advice, its normally no advice / client directed.
In relation to ASIC’s statement that this now provides clarity on where general advice stops and personal advice begins — it only took an appeal to the full court of the Federal Court to clarify it, legislative drafting at its best.
[quote=small fish]14 clients, seriously? I hate to think how much time and money both parties spent on that[/quote]
I think you might have missed the point Small Fish. This has now set a precedent where organisations provide personal advice under the guise of it being general advice.
Finally a sensible judgement. It was so obvious that Westpac were trying to game the system with these sales tactics. Still plenty of work to do in this space to level the playing field. I went to an event a few months ago and one fund had a “Consolidation Station” where they were happy to get people to consolidate their super accounts on the spot. No enquiry about fees, lost insurance, exit costs, nothing.
Incarcerate the Westpac board!!
14 clients, seriously? I hate to think how much time and money both parties spent on that
Blimey – this could have big knock-on effects for the 30% of SMSF accountants who conduct business and implement SMSF transactions (hence earning fee income) without licensed advice.
1. No such thing as general advice, remove it completely
2. Label call center’s appropriately. Sales Consultant.
That sounds pretty conclusive. I have seen approaches like this with my customers and I got one of those myself – a CBA person I had a good relationship with was clearly under great pressure to sell me one of their products. Not pleasant to say no in such a situation.
‘[Insert name of Industry fund] took unfair advantage of that asymmetry by implementing a carefully crafted telephone campaign … The telephone campaign was directed to persons with whom [Insert name of Industry fund] 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, [Insert name of Industry fund] did not advise its customers about the matters that they should consider before deciding to consolidate their superannuation. Nor did [Insert name of Industry fund] even suggest to its customers that they reflect on the decision or seek advice about the decision. Through the campaign, [Insert name of Industry fund] pursued its own self-interest and disregarded the best interests of its customers.’ …
This will have a major impact on all mortgage brokers who sell personal insurance under the guise of ‘general advice’. Now ASIC can argue that any ‘general advice’ that uses a client’s personal information or where an ‘existing relationship is in place’ will be caught under personal advice. With the introduction of ‘best interest’ this should capture those brokers who believe they can sell personal insurance without provide personal advice e.g. appropriate advice. Interesting days ahead.
Now ASIC do the sensible thing (if you ever can) and get rid of the term General Advice.
[b]General Advice = Product Information ONLY. [/b][b][/b]
It is not Advice and never should have been given this title.
ASIC you have created this problem for the Banks to exploit and now need to definitively stop it !!!!!!!!
I guess this means General Advice from Industry Super call centres should be banned.