Federal Court delivers verdict on Westpac best interests case
The Federal Court has made a decision on a case more than two years after ASIC began proceedings against two Westpac subsidiaries for failing to comply with the best interests duty.
In December 2016, ASIC alleged that Westpac Securities Administration Limited (WSAL) and BT Funds Management Limited had breached the best interests duty by conducting a telephone sales campaign recommending that customers roll out of their superannuation funds into their Westpac-related superannuation accounts without undertaking a proper comparison of the superannuation funds, as required by law.
ASIC also argued that WSAL and BT Funds breached the AFSL conditions through this conduct and provided personal financial product advice to the customers.
The Federal Court’s decision, handed down on 21 December 2018, found that WSAL and BT Funds breached section 912A(1)(a) of the Corporations Act.
Section 912A(1)(a) states that AFSLs must “do all things necessary to ensure that the financial services covered by their licences were provided honestly, efficiently and fairly”.
However, the Federal Court rejected ASIC’s case that WSAL and BT Funds provided personal advice to the 15 customers in question, thereby breaching 912A(1)(b) of the Corporations Act, stating that an AFSL must “comply with the conditions on the licence”.
“The ‘financial product advice’ was not ‘personal advice’ within the meaning of section 766B(3)(a) of the act because the callers did not consider one or more of the objectives, financial situation and needs of the customers to whom the advice was given,” the judgment read.
“Further, the ‘financial product advice’ was not given in circumstances where a reasonable person might expect the provider of that advice to have considered the financial situation of the customer.
“Accordingly, the ‘financial product advice’ was not ‘personal advice’ within the meaning of section 766(3)(b) [of the act].”
ASIC said it will review the decision. The matter will return to the Federal Court on 7 February.
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