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.
Here we go. No way out of this. Westpac breaching the law systematically over a prolonged period in defiance of ASIC’s continuous requests to stop,
ASIC will cancel Westpac’s licence for sure.
It’s a done deal. All over red Westpac.
Has to happen.
Righht… So how does this ruling fit in with a superannuation trustee’s responsibility to look after members’ best interests?
I’ve been saying it for ages. Why give advice personal advice and the mountain of compliance and potential for litigation when you can give the same advice under general advice. You also won’t have to go through the FASEA rubbish
Can’t think why ASIC would want to lose this point…. if it won it there would be hell to pay over why it did not take stronger action against all the banks years ago when this scam started.
Why don’t we remove FASEA, BID, FoFA and LIF and make it a free for all?!? The reality is the removal of the rubbish inclusive of direct insurance, call centre super and intra fund advice, would provide the opportunity to progress.
Industry funds do this all the time with their consolidation hype with no consideration for the insurance the client might have.
Also if you walk into an industry fund office for financial advice will you get anything else.
Time to wake up
Memo Justice Hayne – BAN GENERAL ADVICE !!!! ASIC have lost control of the General Advice bandwagon. This judgment clearly states GENERAL ADVICE can be abused with impunity if super can be declared by a court as not requiring PERSONAL ADVICE. [b]“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,” [/b]the judgment read.
Is not changing your super a personal objective? What happens in the Corps Test for advisers if we get that question ?
What a strange interpretation. How is recommending to change super funds [i]not[/i] personal advice? Does this mean that advisers can now just suggest clients change super funds if they call the clients instead of meeting them face to face?
This case more than demonstrates that general advice, when product replacement is recommended, must be banned. This glaring issue allows general advice to be used as an excuse to provide detrimental ‘advice’, knowingly and willingly and must be changed so that direct insurers, industry funds, product providers etc. cannot continue to act in such a detrimental manner towards the Australian consumer.
ok, right! So it is ok to roll over someone’s super as long as you don’t ask them any questions about their goals and objectives? Hmmmmm, Industry funds have been doing this for years so the whole industry is all ok, except for those pesky financial planners who actually care about clients and ask all the questions to determine what is best for the client.
Right is wrong and wrong is right, and the “law” is an ass
This is an interesting case and will no doubt set a precedent for the industry. This could see greater scrutiny for all superannuation funds (retail and industry) and their contact with clients on consolidating superannuation funds. I don’t believe that allowing funds to hide behind intra-fund advice should absolve them of their duties under s947D.
Good result. Next step is to prosecute the Industry Funds for giving exactly the same type of illegal advice to thousands of people via their “workplace seminars”.
Arrogant asses got their asses handed to them. More to follow!