In its case against ASIC over a telephone campaign promoting superannuation consolidation, Westpac argued it was sales and marketing, not advice. The Federal Court disagreed.
“The dichotomy which Westpac seeks to establish in this case between advertising and marketing on the one hand, and advice on the other hand is unhelpful,” the court said.
Westpac ran campaigns in 2014 and 2015 to encourage customers to roll over funds held in external superannuation accounts into their existing accounts held with Westpac Securities Administration Ltd and BT Funds Management.
When the case first went to court, the primary judge concluded that the advice was general, not personal.
On appeal, ASIC argued that Westpac provided personal advice “impermissibly”.
Westpac also appealed, arguing that the primary judge was wrong to find it provided financial product advice.
The appeal court found that 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 court said: “The campaign consisted of making calls to existing Westpac customers on the basis that the purpose of the call was to help the customer in respect of the customer’s superannuation.
“The reasonable customer would not expect that in such a serious context, the customer’s superannuation, and given the existing relationship between them, Westpac would present itself as helping the customer if, in reality, it was doing nothing more than helping itself.”
The court had to rule on whether or not bank staff were offering advice and it also had to rule on whether this amounted to personal advice or general advice.
It said: “What must be established, in deciding whether Westpac provided advice, is that Westpac made a recommendation or a statement of opinion that was intended or could reasonably be regarded as having been intended, to influence the customer in making a decision in relation to her BT account.”
The court said its review of telephone transcripts convinced it that there was an implied recommendation that customers should roll over their external accounts into their BT account.
It said: “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 s funds held by the customer.
“Westpac gave personal advice, because when the telephone exchanges are considered as a whole 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 that the customer should accept the service to move accounts funds into his or her BT account, carrying with it an implied statement of opinion that this step would meet and fulfil the concerns and objectives the customer had enunciated on the call in answer to deliberate questions by the callers about paying too much in fees and enhancing manageability.
“This was personal advice.”
Once it established that it was personal advice, the court found there was a clear contravention of the duty to act in the best interests of the customers in making the relevant recommendations to accept the rollover service.
Westpac did not attempt to inform the customers to whom it gave the financial product advice whether it was in their best interests to accept the advice.
Callers were not taking into account the customers’ objectives. “A reasonable person might (indeed would) expect the caller to have considered customers’ objectives in making the implied recommendation to accept the service.”
When BT trained staff who would make the marketing calls, the training included an explanation of the difference between personal and general advice.
However, “there can be no doubt that Westpac’s intention was to influence the customers in making a decision in relation to a particular financial product.”
The calls “involved techniques of psychology in bringing the customer to a decision favourable to the interest of Westpac.”