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Westpac (ASX: WBC) has failed in its High Court bid to overturn a ruling that found the banking giant had unfairly swayed investors to roll their superannuation into its BT Funds Management subsidiary.
It brings to an end a four-year battle by the Australian Securities and Investments Commission (ASIC) to secure a ruling that Westpac had breached financial services laws where it is required to act honestly and in the best interests of clients.
Between 2013 and 2016, Westpac embarked on telephone and direct mail campaigns to swing investors into its products, leading to a $650 million inflow of funds under management.
In a unanimous judgement, the High Court has upheld the Full Federal Court decision of October 2019 that BT Super had provided personal financial product advice to customers, the kind that can only be provided by licenced financial advisers.
In the judgment, Justice Gordon says the general advice warning was given only once at the beginning of the telephone conversation.
"Members were subsequently asked directly about their personal objectives," he says.
"Members were not encouraged to seek personal advice before deciding whether to accept the rollover service."
The decision notes that customers "might reasonably have expected that, given the nature of Westpac's business and its experience and expertise in relation to financial matters like superannuation, Westpac had taken the objectives it had elicited from the member into account in recommending the roll-over service".
It suggests customers may have been under the impression that rolling over their funds to Westpac would have been a "no brainer".
ASIC commissioner Danielle Press says the High Court decision clarifies the difference between general and personal advice for consumers and financial services providers.
"Westpac were actively conducting a sales campaign aimed at rolling customers into Westpac products under the banner of general advice," Press says.
"By clarifying the distinction between tailored, quality, personal advice in the customer's interest, and general advice given via a sales campaign, today's judgment will provide clear guidance to those financial institutions that develop campaigns to sell financial products through direct approaches to retail clients.
"ASIC will continue to bring enforcement action against misconduct, including advice that is not in the best interest of clients.
"As noted by the High Court, consumers' decisions regarding superannuation accounts are significant financial decisions and ASIC has a focus to lift standards in this area."
The pecuniary penalties to be levied against Westpac will be decided by the Federal Court on a date to be set.
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