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General /Personal Advice Ruling held

Thursday 4 February 2021
Earlier this month saw the confirmation from the High Court that the Westpac Bank subsidiaries, Westpac Securities Administration Limited and BT Funds Management Limited, did in fact  breach financial services laws.  
In an official statement, Australian Securities and Investments Commission (ASIC) Commissioner Danielle Press said, “The High Court has provided clarity concerning 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.”
Implications for GRC 
“For me, this confirms the grey area that people have been pushing in the general versus personal advice space,” GRC Institute Managing Director Naomi Burley said. “Many organisations figured that if they didn’t ‘know’ too much or ask too many questions and worded it carefully, then the advice stayed general.”
“My take is that this confirms that if it is a reasonable expectation to ask some questions before even mentioning the financial option or product or that the organisation actually holds that information somewhere but just don’t give it to the call centre doesn’t get them out of the technicality of it reasonably being personal advice.”
Acting outside their license 
The court upheld the federal court judgment that the two Westpac subsidiaries acted outside of what they were licensed to do by providing 14 customers with personal financial product advice.  
The ASIC Commissioner 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 judgment will provide clear guidance to those financial institutions that develop campaigns to sell financial products through direct approaches to retail clients.”
Since 2019, ASIC regulated community would be aware of the ‘why not litigate’ mantra from the corporate regulator which had been criticised for the issue of court-enforceable undertakings rather seeking penalties for the legislative breaches.  
“ASIC will continue to bring an enforcement action against misconduct, including advice that is not in the best interest of clients. As noted by the High Court, consumers’ decisions regarding superannuation accounts are ‘significant financial decision[s]’ and ASIC has a focus to lift standards in this area,” Press said.