The findings of Westpac’s personal advice case have provided “clarity” over the distinction between the provision of personal and general advice, according to the big four bank.
A spokesperson for Westpac said: "This was a test case brought by ASIC [Australian Securities and Investments Commission] against Westpac Securities Administration Limited and BT Funds Management Limited in relation to 14 customers concerning the rollover of their superannuation accounts.
"It was an important process for the financial services industry to provide clarity on the distinction between the provision of ‘personal’ and ‘general’ advice when speaking with our customers. The findings in this case have provided that clarity.”
The Federal Court has ordered Westpac Bank subsidiaries Westpac Securities and BT Funds Management to pay a combined penalty of $10.5 million for failing to act in their clients' best interests.
The penalty followed the High Court's unanimous decision on 3 February, 2021, that Westpac Securities and BT Funds Management breached their best interests duty when they provided personal financial product advice in calls made to 14 customers, despite neither firm being licensed to provide personal advice.
An ASIC investigation found that Westpac Securities and BT Funds conducted two telephone campaigns which recommended that customers roll out of their other superannuation funds into a Westpac-related superannuation account.
Danielle Press, ASIC commissioner said: “Westpac was actively conducting a sales campaign aimed at rolling customers from their existing superannuation accounts into Westpac superannuation products. In doing this, Westpac failed to act in the best interests of their customers.
“Consumers’ decisions about their superannuation are significant long-term financial decisions affecting their retirement income.
“Financial institutions seeking to influence those decisions by providing financial product advice, must comply with the law designed to protect consumers.
“The penalty of $10.5 million handed down related to calls made to just 14 consumers and should act as a strong deterrent to any entity breaching these provisions of the law.”