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When the general becomes personal – Westpac, ASIC and the meaning of personal advice

10 February 2021

#Superannuation, Funds Management & Financial Services, #Dispute Resolution & Litigation

Published by:

Alana Giles, Daniel O’Connor, Tess Simpson, Michael O'Connor

When the general becomes personal – Westpac, ASIC and the meaning of personal advice

By a unanimous decision handed down on 3 February 2021, the High Court of Australia dismissed an appeal by Westpac which sought to overturn a ruling of the Full Federal Court that it had provided ‘personal advice’ to existing customers in contravention of the conditions of its Australian Financial Services Licence (AFSL).


Between 2013 and 2016, Westpac conducted a campaign to increase its funds under management by encouraging existing fund members to roll over external superannuation accounts into pre-existing Westpac superannuation accounts.

The appeal to the High Court concerned the experiences of 14 existing Westpac fund members. Each member:

  • received a letter or email from Westpac who offered to search for any external superannuation accounts they had in order to roll them over into the member’s Westpac account
  • subsequently received at least one telephone call from an adviser in Westpac’s Super Activation Team. Although the calls varied, in each instance the following occurred:
    • the member was given a warning that everything discussed on the call would be general in nature and would not take into account their personal financial needs
    • the adviser said they were calling to help the member and asked the member what the main benefit of consolidating their superannuation was
    • the adviser affirmed the member’s reasons to consolidate their superannuation through the use of “social proofing” language, by which the member was told that their objectives, beliefs or reasons were commonly held
    • the call concluded with the adviser offering to help roll over the member’s superannuation into their Westpac account.

The conditions of Westpac’s AFSL did not authorise it to provide financial product advice constituting ‘personal advice’ within the meaning of section 766B of the Corporations Act (Act).


The key question for the High Court to determine was whether the financial product advice Westpac gave members over the phone was ‘personal advice’ within the meaning of section 766(3)(b) of the Act, because “the advice was given or directed to the member in circumstances where a reasonable person might expect Westpac to have considered one or more of the member’s objectives, financial situation and needs.”

The Financial Services provisions of the Act define personal advice as “financial product advice that is given or directed to a person (including by electronic means) in circumstances where:

  • the provider of the advice has considered one or more of the person’s objectives, financial situation and needs (otherwise than for the purposes of compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 or with regulations, or AML/CTF Rules, under that Act); or
  • a reasonable person might expect the provider to have considered one or more of those matters.”

Key findings and takeaway points

The High Court held that the advice given to the 14 members during the telephone calls was ‘personal advice’ within the meaning of section 766B(3) because:

  • the substance of the advice included a recommendation that the member roll over their superannuation – made in order to influence the member to roll over his or her superannuation to Westpac
  • a reasonable person might have expected Westpac to have considered one or more of the member’s objectives, financial situation and needs.

Knowledge of the member’s financial situation

In the case of the 14 members, each received a ‘personal communication’ which "specifically related to the member’s personal financial situation in relation to his or her superannuation".

The Court confirmed that in order to provide personal advice, an adviser does not need to have a comprehensive understanding of the member’s financial situation. Personal advice only requires that the adviser has considered, or a reasonable person might expect the adviser to have considered, one or more of the definition’s three requirements – a person’s objectives, financial situation, or needs. 

Some issues arise here:

  • a provider does not require a comprehensive knowledge of all three requirements. Instead, the term “considered” should be understood to mean “took account of”. In other words, the term “considered” should not be interpreted “as importing a requirement of an active and comprehensive process of evaluation”
  • when considering what a reasonable person ‘might expect’, the standard is “one of reasonable possibility, not reasonable probability”
  • financial product advice is not considered to be personal advice simply because a provider has not considered each of a person’s objectives, financial situation or needs. It is sufficient for a provider to only consider at least one of those three requirements (for example, a person’s objectives), though noting that it is a requirement under the FOFA Safe Harbour Rules that a provider considers each of those three requirements
  • providers need to ensure that not only are their general advice strategies, disclosures and scripts sufficiently robust to ensure that they do not crossover into personal advice territory, but that:
    • any advice that may do so also meets or can fall within the FOFA Safe Harbour Rules framework
    • such advice does not raise questions as to whether the provider (or its representatives) is failing to meet its AFSL or any other authorisation obligations.

General disclaimers are only as good as the actions taken under them

The joint majority considered that the verbal disclaimers provided to members were not sufficient to render the financial product advice as general advice. This is because immediately after the disclaimer was made, the Westpac representative elicited the member’s objectives from them and used social proofing techniques to confirm the validity of those objectives.

For example, one adviser confirmed to a member that saving on fees and manageability are “two main reasons our clients do like to bring their super together” and that doing so “does make a lot of sense from a management point of view, for sure”.

Gordon J held that “the significance of the general advice warning must be assessed in light of all the circumstances. [It] was given only once, at the beginning of the telephone conversation. Members were subsequently asked directly about their personal objectives. [They] were not encouraged to seek personal advice before deciding whether to accept the rollover service.”

AFSL holders should be aware that having an established practice of providing general disclaimers will not necessarily protect them from being found to have provided personal advice. The High Court’s decision demonstrates that when determining whether financial product advice is to be classified as general or personal in nature, all circumstances will be taken into account. In other words, the facts will speak for themselves.

No fees charged can still be considered personal advice

The High Court made clear the fact that the superannuation roll-over service offered free of charge by Westpac was, “at best neutral in relation to the reasonable expectations of a member” in circumstances where Westpac had a pre-existing relationship with the member and the rollover served Westpac’s interest.

In other words, a reasonable person might expect that where a finance service provider is acting in its own interests, a fee for the provision of personal advice is less likely to be required. Of relevance was the fact that the members had already paid fees to Westpac for financial services related to superannuation.

However, it may be argued that the definitions of ‘financial product advice’, ‘personal advice’ and ‘general advice’ are not characterised or differentiated by whether a fee or cost is charged – the Act is silent on that and there is no ambiguity in the text. Both forms of financial product advice are predicated on the intentions of a provider (or what could reasonably be considered as being such intentions) and not whether the client paid for such advice.


By this decision, the High Court has made clear that ‘personal’ financial product advice covers a broad range of conduct. If a reasonable person might expect that his or her adviser has considered at least one of their objectives, financial situation and needs in providing advice about a financial product, that advice is likely to be personal in nature – bearing in mind that the relevant test is that of “reasonable possibility” not “reasonable probability”.

The case will now return to the Federal Court for a hearing as to relief. ASIC has stated that it will seek orders that pecuniary penalties be imposed regarding Westpac’s conduct. Westpac can be fined a maximum of $1 million per offence.

AFSL holders should carefully review their marketing, communication and script material to ensure that they are not inadvertently providing personal advice to consumers contrary to the conditions of their AFSL.

It will be interesting to see whether the Australian Law Reform Commission uses this case to make recommendations to amend the definitions of ‘financial product advice’, ‘personal advice’, and ‘general advice’ as part of its current review of the legislative framework for corporations and financial services regulation. Any form of clarity would be much welcomed.

Authors: Luke Hooper, Kim MacKay, Alana Giles, Daniel O’Connor, Tess Simpson & Michael O’Connor.

The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Alana Giles, Daniel O’Connor, Tess Simpson, Michael O'Connor

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