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Westpac penalised millions in personal advice case
The big four bank has been ordered to pay a penalty of $10.5 million by the Federal Court in a personal advice case that was previously thrown out, according to a statement.
Westpac penalised millions in personal advice case
The big four bank has been ordered to pay a penalty of $10.5 million by the Federal Court in a personal advice case that was previously thrown out, according to a statement.
In a statement made by Westpac on Monday, the bank acknowledged the penalty outlined by the court, highlighting it had full provisions of the case already outlaid in its latest financial reports.
The penalty relates to proceedings brought by ASIC in 2016 against Westpac and BT, where “personal advice” was found to have been provided by call centre staff to 14 customers.
The staff advised each person to accept an offer to roll over their external superannuation accounts into their account with the big four bank.
The big four bank lost its appeal against a Full Court decision in February.
At the time, the courts heard the case concerning two campaigns where Westpac had contacted 14 members via phone and advised each person to accept an offer to roll over their external superannuation accounts into their account with the big four bank.
As a result of the campaigns, Westpac increased its funds under management by almost $650 million between January 2013 and 16 September 2016.
ASIC first alleged that Westpac and BT Funds Management had breached the best interests duty in 2016, by recommending that customers roll over their superannuation into Westpac-related accounts without undertaking a proper comparison of the funds, as required by law.
The Federal Court ruled in favour of Westpac and BT Funds Management in 2019, finding they did not supply personal advice during the phone calls and that it had fallen under general advice.
However, after ASIC appealed the decision, the Full Court reversed the ruling in 2019, finding that during calls to 14 of the 15 customers the Westpac staff had provided personal advice in breach of the company’s AFSL.
ASIC commissioner Danielle Press noted Westpac was actively conducting a sales campaign aimed at rolling customers from their existing superannuation accounts into Westpac superannuation products. In doing this, Westpac failed to act in the best interests of their customers.
"‘Consumers’ decisions about their superannuation are significant long-term financial decisions affecting their retirement income," she explained.
"Financial institutions seeking to influence those decisions by providing financial product advice, must comply with the law designed to protect consumers. The penalty of $10.5 million handed down related to calls made to just 14 consumers and should act as a strong deterrent to any entity breaching these provisions of the law,’ commissioner Press said.
In a statement made on Monday, the big four bank acknowledged the seriousness of the case.
“We take our obligations to our customers very seriously,” a spokesperson for Westpac said.
“This was a test case brought by ASIC against Westpac Securities Administration Limited and BT Funds Management Limited in relation to 14 customers concerning the rollover of their superannuation accounts.
“It was an important process for the financial services industry to provide clarity on the distinction between the provision of ‘personal’ and ‘general’ advice when speaking with our customers. The findings in this case have provided that clarity.”
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