The Full Federal Court has upheld ASIC’s appeal from a decision of the Federal Court regarding whether two Westpac subsidiaries failed to comply with the best interests duty.
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 )
“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 )
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.
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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