Westpac penalised for millions in personal advice court case

On Monday, the bank acknowledged the penalty that it fully provisioned in its first-half 2021 account.

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.

“We take our obligations to our customers very seriously," a Westpac spokesperson told ifa.

"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.”

It comes after Westpac lost its appeal against a Full Court decision in February.

"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," ASIC Commissioner Danielle Press said.

"Consumers’ decisions about their superannuation are significant long-term financial decisions affecting their retirement income. 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."

Earlier this month, ASIC conceded that the advice sector had been charged for a proportion of its High Court case against Westpac, saying actions related to unlicensed conduct were “in the interests of licensed participants in [the advice] sector, because it maintains integrity and trust in the licensed sector and deters competition from unlicensed and unregulated competitors”.

The regulator’s figures showed that 60 per cent of costs in the case had been charged to the advice sector, while 40 per cent had been charged to the super sector.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.