The corporate regulator is appealing a test case it lost against Westpac over the advice given to customers during a campaign encouraging them to roll over their superannuation accounts.
The Australian Securities and Investments Commission has filed an appeal over a case that has wider implications for the wealth management industry because it centres on the distinction between personal and general financial advice.
The Federal Court in December found two Westpac subsidiaries breached their general obligation to ensure they provided financial services efficiently, honestly and fairly.
But the court found ASIC failed to make out its case that personal advice was provided during phone calls to 15 Westpac customers about the rollover of superannuation accounts.
ASIC on Monday said it was appealing in a bid to obtain further clarity and certainty about the difference between general and personal advice for consumers and financial services providers.
Top Australian Brokers
- City Index - Aussie shares from $5 - Read our review
- Pepperstone - Trading education - Read our review
- IC Markets - Experienced and highly regulated - Read our review
- eToro - Social and copy trading platform - Read our review
“The dividing line between personal and general advice is one of the most important provisions within the financial services laws,” ASIC deputy chair Daniel Crennan QC said.
“It directly impacts the standard of advice received by consumers.”
The law imposes greater obligations on the provision of personal advice, which must take into account customers’ particular circumstances.
The civil case centred on two telephone campaigns run by Westpac Securities Administration Ltd and BT Funds Management Ltd in 2014, recommending customers roll over their other superannuation funds into their Westpac super accounts.
The campaign boosted Westpac’s funds under management by almost $650 million.
ASIC alleged the Westpac subsidiaries provided personal financial product advice to customers, when they are not permitted to do so under their financial services licences, and did not undertake a proper comparison of the super funds as required by law.
Westpac denied breaking the law and told the court it simply sought to encourage customers to roll over superannuation into their existing BT account by offering to do it for them on the telephone.
A spokesperson said BT Financial Group would carefully consider its next steps and continue to work within the court process.
