ASIC gets Westpac case boost as BT advice appeal gets green light

ASIC has finally got a leg up in its landmark superannuation advice case against Westpac.

The Australian Securities and Investments Commission has finally got a leg up in its landmark case against Westpac, with the Federal Court allowing its appeal and labelling the bank’s moves “carefully calculated” to get customers to move their superannuation to its BT unit.

The corporate regulator was appealing an earlier court loss against Westpac in December, after deciding to dispute the ruling in February.

In contention was whether Westpac provided personal advice or general advice to superannuation customers.

Monday’s ruling by a panel of three judges said the appeal should be allowed with costs and Westpac’s cross-appeal dismissed. It suggested bank staff went unlawfully beyond providing general advice to coerce customers.

Read more: AMP extends adviser deadline | Big banks’ dividends in focus as profits loom | Westpac unhappy with Panorama

“Westpac’s attempts to have customers transfer funds from their external accounts with other superannuation funds, into their BT accounts, were carefully calculated to bring about this desired result by giving no more than general advice,” the judgment said.

“It was marketing by telephone selling. The difficulty is that the decision to consolidate superannuation funds into one chosen fund is not a decision suitable for marketing or general advice. It is a decision that requires attention to the personal circumstances of a customer and the features of the multiple funds held by the customer.”

In the initial judgment, Judge Jacqueline Gleeson said a phone campaign, in which customers were urged to move their superannuation into accounts at BT, breached the bank’s overarching obligation to provide financial services “efficiently, honestly and fairly”.

However, she did not find that any of the 15 case studies advanced by ASIC reflected personal advice to customers, which would have resulted in further breaches of the law.

ASIC’s complaints about Westpac were primarily directed at outbound calls to customers over letters that were also sent.

The appeal panel was unanimous in its findings, taking issue with the bank’s actions and siding with ASIC.

“Westpac attempted, assiduously, to get the customer to make a decision to move funds to BT without giving personal financial product advice as defined in the legislation. It failed.”

It went on to say that part of the issue was that Westpac staff were trying to get a decision secured by the customer at the time of the call, rather than ensuring they had time to consider their personal circumstances.

“It (Westpac) gave personal advice, because when the telephone exchanges are considered as a whole and in their context, including importantly the ‘closing’ on the telephone by getting the decision made during the call, there was an implied recommendation in each call,” the judgment noted.

It was also scathing of the actions of Westpac staff.

“Through the campaign, Westpac pursued its own self-interest and disregarded the best interests of its customers. That conduct can rightly be described as unfair and involved a contravention of section 912A (1)(a) of the Act,” the judgment said.

Westpac can seek to appeal to the High Court.

An ASIC statement said the regulator welcomed the decision of the appeal court, noting it provided “clarity and certainty concerning the difference between general and personal advice” for consumers and financial services providers.

“The Full Court also found that WSAL (Westpac) and BTFM (BT), by providing personal advice to their customers, failed to comply with other financial services laws in the Corporations Act, including the ‘best interests duty’,” ASIC’s statement said.

In a statement, Westpac acknowledged the judgment and said it was “carefully considering” the ruling.

The judgment said parties were to agree on court declarations and orders, otherwise they would make submissions and the court would decide on declarations and orders.