The Australian high court has upheld the full federal court decision that Westpac Bank subsidiaries, Westpac Securities Administration Limited (WSAL) and BT Funds Management Limited (BTFM), breached financial services laws.
This includes the “requirement to act in their clients’ best interests and the requirement to act honestly, efficiently and fairly”, the Australian Securities and Investments Commission (Asic) said.
The high court dismissed the bank’s appeal that it breached the Asic Corporations Act by providing personal financial product advice with calls made to 14 customers.
Neither company had a licence to provide personal financial advice.
Details
On 28 October 2019, Asic won an appeal in the full federal court against WSAL and BTFM with respect to two telephone campaigns by the Westpac companies which recommended that customers roll out of its other superannuation funds into a Westpac-related superannuation account.
As a result of the campaigns, Westpac increased its funds under management by almost A$650m (£363m, $495m, €412m) between 1 January 2013 and 16 September 2016.
The decision of the high court clarifies the difference between general and personal advice for clients and financial services providers.
The matter will now return to the federal court for a hearing on compensation. Asic said it will seek orders for pecuniary penalties in relation to WSAL and BTFM’s conduct.
‘Clarity’
Danielle Press, Asic commissioner, said: “The high court has provided clarity concerning the differences between personal advice and general advice. Westpac were actively conducting a sales campaign aimed at rolling customers into Westpac products under the banner of general advice.
“By clarifying the distinction between tailored, quality, personal advice in the customer’s interest, and general advice given via a sales campaign, today’s judgment will provide clear guidance to those financial institutions that develop campaigns to sell financial products through direct approaches to retail clients.
“Asic will continue to bring enforcement action against misconduct, including advice that is not in the best interest of clients.”
The bank said: “Westpac acknowledges today’s decision by the High Court of Australia which has dismissed Westpac’s appeal in relation to proceedings brought by Asic about the provision of financial product advice.”
