ASIC has filed an appeal with the Federal Court of Australia against the decision of the Honourable Justice Gleeson regarding Westpac subsidiaries; Westpac Securities Administration Limited (WSAL) and BT Funds Management Limited (BT Funds).
On 21 December 2018, the Federal Court found WSAL and BT Funds breached the Corporations Act (section 912A(1)(a)) but that ASIC did not make out its case that ‘personal advice’ was provided to 15 customers (19-001MR). The case was a ‘test case’, being the first time the Court has specifically considered s766B of the Corporations Act which sets out the important dividing line between general and personal advice. More onerous obligations are placed on licensees providing personal advice.
The Court’s findings concerning s912A(1)(a) are significant as the Court found that a sales process WSAL and BT Funds had engaged in to sell their superannuation products was contrary to law because those entities had failed to do all things necessary to ensure the financial services were provided efficiently, honestly and fairly.
ASIC’s decision to appeal the Federal Court decision in relation to personal advice reflects ASIC’s desire to obtain further clarity and certainty concerning the difference between general and personal advice for consumers and financial services providers.
‘It is important for a regulator to seek clarity from the Court on pivotal statutory provisions within its remit. The dividing line between personal and general advice is one of the most important provisions within the Financial Services Laws. It directly impacts the standard of advice received by consumers. This is why ASIC brought this test case and ASIC believes further consideration by the Full Court of the Federal Court is necessary to better inform consumers and industry,’ ASIC Deputy Chair Daniel Crennan QC said.
ASIC had alleged that during two telephone campaigns, commenced in 2014, WSAL and BTFM provided personal financial product advice to customers, specifically recommending that customers roll out of their other superannuation funds into their Westpac-related superannuation accounts. WSAL and BTFM are not permitted to provide personal financial product advice under their Australian financial services licences.
ASIC also alleged that WSAL and BTFM did not undertake a proper comparison of the superannuation funds as required by law (16-460MR).
Download ASIC’s Notice of Appeal.
© Australian Securities & Investments Commission. Reproduced with permission.