Westpac Securities Administration Ltd & Anor v Australian Securities and Investments Commission [2021] HCA 3

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Facts

  • Each of Westpac Securities Administration Ltd and BT Funds Management Ltd (together, “Westpac“) held an Australian Financial Services Licence granted under the Corporations Act 2001 (Cth) (“the Act“) authorising them, as persons carrying on a financial services business in Australia, to provide financial services, including financial product advice.
  • The appeal concerned whether financial product advice given by Westpac to members of superannuation funds of which they are trustees was “personal advice” within the meaning of section 766B(3)(b) of the the Act.
  • During a campaign, Westpac had telephoned members and advised them to accept an offer to roll-over their external superannuation accounts into their account with Westpac.
  • Section 766B(3)(b) of the Act defines “personal advice” to include “financial product advice” given or directed to a person in circumstances where a reasonable person might expect the provider to have considered one or more of the person’s objectives, financial situation and needs. Section 766B(4) defines “general advice” as financial product advice that is not personal advice. The Act imposes more onerous obligations on an adviser who provides personal advice, obligations Westpac accepted they had breached if they had provided personal advice.

Issues

  • What is financial product advice?
  • What is the difference between general advice and personal advice?
  • When will an Australian financial services licensee have breached its duty to ensure that the financial services provided are provided efficiently, honestly and fairly, pursuant to section 912A?

Held

  • The Court held that Westpac had provided personal advice to the members during their campaign. The word “considered” in section 766B(3) does not mean active process of evaluation and reflection but actually means “took account of“.  This is consistent with its counterpoint in section 949A(2)(a) and the protective purpose of section 766B(3).
  • The words “one or more of the person’s objectives, financial situation and needs” in section 766B(3) contemplate that consideration is at least one aspect of the client’s objectives, financial situation or needs. A reasonable person in the position of each of the members called by Westpac might expect Westpac to have taken into account at least one aspect of the member’s objectives, financial situation or needs.
  • This expectation was evidenced by the fact that Westpac had elicited from each member, with whom Westpac had a pre-existing relationship, an indication of their personal objectives of saving on fees and improving the manageability of superannuation; proceeded to confirm the validity of the expressed objectives and appropriateness of the roll-over service to achieve them; and then moved into an offer to effect the roll-over. That the members’ objectives were “generic” or generally applicable did not mean they ceased being personal objectives capable of giving rise to an expectation.

Quotes

In answering that question, several features of s 766B(3)(b) are significant. First, it poses an objective test, assessed at the time the financial product advice was given and having regard to the circumstances in which that advice was given.  It refers to a reasonable person’s expectation, being a reasonable person standing in the shoes of the person receiving the advice. It falls for consideration where financial product advice, intended (or reasonably regarded as being intended) to influence a person in making a decision about a particular financial product or class of financial products, has been given or directed to a person and it is to be assessed having regard to the circumstances in which that advice was given or directed.

(Gordon J at paragraph [57])

Full Text

The full text is available here: http://eresources.hcourt.gov.au/showCase/2021/HCA/3


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