In Westpac Securities Administration Ltd & Anor v Australian Securities and Investments Commission  HCA 3 the High Court of Australia dismissed Westpac’s appeal against the Federal Court Full Court’s decision that the marketing campaign by Westpac and BT to encourage customers to roll over superannuation accounts into their account held with Westpac and BT involved the provision of “financial product advice” that was “personal advice” within the meaning of section 766B(3) of the Corporations Act.
The Federal Court had also decided that as a result of there being personal advice, there was a contravention of the duty in section 961B to act in the best interests of the customers in making the relevant recommendations to accept the rollover service as well as a breach of the obligation to act fairly under section 912A(1)(a).
The matter will be heard by the Federal Court to determine the penalty for Westpac.
Section 766B(3)(b) of the Act defines “personal advice” so as to include “financial product advice” given or directed to a person in circumstances where a reasonable person might expect the provider to have considered one or more of the person’s objectives, financial situation and needs.
Section 766B(4) defines “general advice” as financial product advice that is not personal advice.
The Act imposes more onerous obligations on an adviser who provides personal advice, obligations Westpac accepted they had breached if they had provided personal advice.
The High Court held that “considered” in section 766B(3) means “took account of”.
The words “one or more of the person’s objectives, financial situation and needs” in section 766B(3) mean that consideration of at least one aspect of the client’s objectives, financial situation or needs results in personal advice being given.
The five High Court judges unanimously decided that a reasonable person in the position of each of the members called by Westpac might have expected Westpac to have in fact taken into account at least one aspect of the member’s objectives, financial situation or needs because Westpac
had elicited from each member, with whom Westpac had a pre-existing relationship, an indication of his or her personal objectives of saving on fees and improving the manageability of superannuation.
Westpac then proceeded to confirm the validity of the expressed objectives and appropriateness of the roll-over service to achieve them and then offered to effect the roll-over.
The High Court concluded that even though the members’ objectives were “generic” or generally applicable did not mean they ceased being personal objectives capable of giving rise to the expectation it was personal advice.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.