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"A No Brainer": High Court Confirms the Line Between Personal and General Advice

  • Legal Development 16 February 2021 16 February 2021
  • Asia Pacific

  • Insurance & Reinsurance

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

"A No Brainer": High Court Confirms the Line Between Personal and General Advice

The High Court unanimously dismissed an appeal from Westpac Securities Administration Services Ltd and BT Funds Management Ltd (Westpac) which concerned a campaign to encourage superannuation members with multiple accounts to roll their superannuation into their Westpac account. The issue on appeal was whether the campaign provided customers with general or personal financial advice.

Under s766B(3)(b) of the Corporations Act, (the Act) personal advice is given when a provider "considered one or more of the person's objectives, financial situation and needs". The High Court confirmed the Full Federal Court's decision that the advice was personal. The decision has broad consequences for financial advisors. The decision confirmed that an adviser does not need to know all of a client's circumstance or even a core minimum to give personal advice. 


Between 2013 and 2016 Westpac conducted a campaign to encourage existing members to roll over superannuation accounts held with other entities into their BT account. The campaign was hugely successful, and Westpac increased its funds under management by almost $650 million.

Westpac wrote to members and encouraged them to roll over external accounts into their pre-existing Westpac accounts. They followed up their letters with a telephone call. The calls generally proceeded as follows:

  • The adviser warned the members that the discussion would be general and would not take into account their specific objectives, financial situation and needs;
  • The adviser then said that they were calling to help the member and asked what the member saw as the main benefits of consolidating their superannuation funds;
  • The adviser affirmed the member's reasons to consolidate their superannuation and affirmed that other members commonly held these reasons; and
  • The adviser ultimately recommended that the member should roll over their external accounts to Westpac and offered to help effect the consolidation of the member's external superannuation accounts into their BT account.

At the time of the campaign, Westpac was not authorised under its AFSL  to provide "financial product advice" which was personal. In the proceedings, ASIC alleged that the advice given to members was personal and as a result, Westpac breached its licence obligations.

Statutory Framework

Relevantly s766B of the Act states:

  1. For the purposes of this Chapter, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that:
    (a)  is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or
    (b)  could reasonably be regarded as being intended to have such an influence…
  2. There are 2 types of financial product advice: personal advice and general advice.
  3. For the purposes of this Chapter, personal advice is financial product advice that is given or directed to a person (including by electronic means) in circumstances where:
    (a)  the provider of the advice has considered one or more of the person's objectives, financial situation and needs…; or
    (b)  a reasonable person might expect the provider to have considered one or more of those matters.
  4. For the purposes of this Chapter, general advice is financial product advice that is not personal advice.

Westpac's Submissions

In the appeal, Westpac made three submissions concerning the proper construction of s766B of the Act.

  1. The Full Court erroneously introduced a "normative element" into the inquiry by assuming what a reasonable person might expect the adviser should have considered if acting in the recipient's best interests, instead of asking what a reasonable person might expect the adviser actually to have considered.
  2. When properly construed, the reasonable person test was not satisfied. A reasonable person would know that Westpac could not consider the members' stated objectives because Westpac did not know the members' personal circumstances to consider those objectives.
  3. The words "one or more of the person's objectives, financial situation and needs" refer to something less than what Westpac described as the minimum irreducible objectives, financial situation or needs of the recipient that would reasonably be considered relevant to the subject matter of the advice in question.

High Court's Decision

In the leading judgment, Gordon J rejected each of Westpac's submissions. Her Honour concluded that a reasonable person might expect Westpac to have considered one or more of the member's objectives, financial situation, and needs. Therefore, the financial product advice was personal. She accepted that where an advisor urges a customer to follow a particular course of action, a reasonable person might expect the adviser to have considered the recipient's circumstances in deciding to accept the recommendation and roll over their external superannuation accounts.

In considering the factors a reasonable person might expect, Her Honour took into account the following matters:

  • The subject matter of the advice, which involved a significant long-term financial decision.
  • The pre-existing nature of the relationship between Westpac and its members. A reasonable person would expect in a continuing pre-existing relationship; the representative would have access to all relevant information known to Westpac. It did not matter that the representatives on the call did not have it to hand, the fact that Westpac had the information was enough as a reasonable person would expect that Westpac would pass this information on the advisor.
  • The purpose and tenor of the calls. The advisors repeatedly emphasised that they were helping and assisting the member with their superannuation.
  • The members' objectives, together with the form, content and context of the financial product advice. The advisors repeatedly asked the members about their objectives. A reasonable person might expect that Westpac would consider those objectives when providing any subsequent financial product advice.
  • Her Honour rejected the importance of the general advice warning.  As it gave it at the beginning of the conversation before, they asked about the member's objectives. Members were also not encouraged to seek personal advice before deciding whether to accept the rollover service.
  • Her Honour also considered whether it was relevant that Westpac provided the advice without charge. She concluded that a reasonable person might be less likely to think that this was relevant for two reasons. Firstly, the members paid annual fees to Westpac, and secondly, the campaigned served Westpac's financial interest to increase the funds under management.

Analysis and Takeaways

The decision is important in terms of clarifying the person vs general advice distinction. The factors which Gordon J identifies inform whether advice is general or personal. The decision is a warning to distributors of financial products who may seek to engage in campaign selling because they may unwittingly cross the line of providing personal and not general advice. For those advisers who are engaged in day to day business of providing personal investment advice it is less of a concern. 

However, given that all of the Banks are moving away from operating vertically integrated advice businesses and focusing on their core business of banking, the decision may not be so broad reaching.  

Importantly the judgment confirms that "considered" in the context of s766B(3) does not require an active and comprehensive process of evaluation, as Westpac has submitted. Instead, the focused is on the provider rather than the client. The test for whether an advisor should consider something is undemanding. The decision reinforces the importance of embedding the general obligation of acting efficiently, honestly and fairly in all aspects of the licensee's business.

Where a bank or fund initiates a campaign to its customer base at large it should of course be mindful of Gordon J's conclusions regarding deemed knowledge and consider whether a reasonable person might expect that information should be passed on. The judgment should also prompt licensees to closely scrutinise marketing materials, telephone call scripts, representative training and digital tools and assess, in light of the factors identified, whether they are now providing personal advice.


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