They failed to "act in their clients' best interests"
The High Court has dismissed the appeal of Westpac subsidiaries Westpac Securities Administration Limited (WSAL) and BT Funds Management Limited (BTFM), concluding that they breached financial services laws by failing to “act in their clients’ best interests” and “act honestly, efficiently, and fairly.”
The High Court confirmed that WSAL and BTFM breached the Corporations Act by providing personal financial product advice in calls made to 14 customers despite having no license to provide the service.
Chief Justice Kiefel and Justices Bell, Gageler, and Keane stated: “Each member might reasonably have expected that, given the nature of Westpac’s business and its experience and expertise in relation to financial matters like superannuation, Westpac had taken the objectives it had elicited from the member into account in recommending the roll-over service. That is consistent with the recommendation of the service being presented to each member as a ‘no brainer’ having regard to the manifest benefits to each member to be expected from rolling over into a single Westpac account.
“Given that Westpac’s marketing was apt to create precisely that impression, it can hardly complain that it succeeded. Nor can it sensibly be suggested that the impression so created did not reasonably include an expectation on the part of the member that the recommendation was appropriate for him or her as an individual.”
On October 28, 2019, ASIC won an appeal in the Full Federal Court against the subsidiaries concerning two telephone campaigns recommending customers roll out of their other superannuation funds and into a Westpac-related superannuation account. The campaigns are estimated to have increased Westpac’s funds under management by almost $650 million between January 01, 2013, and September 16, 2016.
ASIC Commissioner Danielle Press said the High Court’s decision clarified the differences between personal advice and general advice.
“Westpac was actively conducting a sales campaign aimed at rolling customers into Westpac products under the banner of general advice,” Press said.
“By clarifying the distinction between tailored, quality, personal advice in the customer’s interest and general advice given via a sales campaign, today’s judgement will provide clear guidance to those financial institutions that develop campaigns to sell financial products through direct approaches to retail clients.”
Press said they will continue to bring enforcement action against misconduct, including advice not in clients’ best interests.
