The outcome of the Federal Court case between ASIC and Westpac will determine the future interpretation of general and personal financial advice, MPs have heard.
Late last year, ASIC announced it had commenced proceedings against Westpac subsidiaries for failing to comply with the best interests duty.
The regulator claims Westpac provided personal financial product advice to customers, specifically recommending they move their other super funds into their Westpac related super accounts, without undertaking proper comparison.
Westpac strongly rejects this allegation, saying customers were given a general advice warning at the start of each conversation, and therefore comparison was not required.
During a hearing yesterday, Westpac chief executive Brian Hartzer told the House of Representatives standing committee on economics that the outcome of this case will be very important.
“Every single one of those calls started with a very clear disclaimer in the script that this is a general advice conversation. ASIC has a view that some of the questions that were asked, notwithstanding the very clear and recorded documented disclaimers, would have tripped into the notion of personal advice," Mr Hartzer said.
“We disagree and we think it is a pretty important principal because we believe that if the ASIC case was to be successful, it would become effectively close to impossible to deliver general advice as intended by the FOFA regime.”
Labor MP Matt Thistlethwaite said while he has no issue with recommending clients consolidate their super, he is concerned that the switch may have left some clients in a worse situation.
“The notion of consolidating isn’t a problem. But in my view, if you’re doing the right thing by the customer, if you’re acting in the customer’s best interest, you probably should be moving them the other way,” he said.
"You should be moving them out of BT and into the industry super fund where there are lower fees and a better return because that is what is in the customer’s best interest.”
Mr Hartzer responded by saying that choosing the right super fund goes beyond just fees and investments.
“The discussion that we would be having with the customers is also about convenience, it’s about helping them find different forms of super, it’s also about the quality of the insurance cover,” he said.
“There are a lot of different aspects in that other than just investment return, which is of course incredibly important.”
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