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Federal Court judgments

Federal Court judgments

By Dan Star QC

Consumer Law Judgment Practice & Procedure 


Corporations law – consumer law – regulatory law

What is “financial product advice”, when is it “personal advice” or “general advice” and the duties that arise depending on which type of advice it is

Australian Securities and Investment Commission v Westpac Securities Administration Ltd [2019] FCAFC 187 (28 October 2019) is an important decision on the interpretation and application of the provisions addressing financial services and markets provided for by Chapter 7 of the Corporations Act 2001 (Cth) (the Act). Relevantly, Division 4 in Part 7.1 concerns when a person provides a financial service. The legislation contains a significant distinction between “personal advice” or “general advice” (as defined in s766B). If only general advice is given, the primary obligations on the provider of the advice are fewer (see Pt 7.6 Div 3 and Pt 7.7 Divs 2 and 4). In contrast, where personal advice is given, there are many additional obligations in order to provide protection to the client (see Pt 7.7 Div 3 and Pt 7.7A, Div 2). This Full Court decision explores the contours of “financial product advice”, “personal advice” and “general advice”. 


The appeal and cross-appeal was in respect of campaigns in 2014 and 2015 by the respondents/cross-appellants to encourage their customers to roll over external superannuation accounts into existing accounts (the BT accounts) that they held with the first respondent/cross-appellant, Westpac Securities Administration Limited (Westpac), and the second respondent/cross-appellant, BT Funds Management. The campaign comprised sending letters and making telephone calls to the customers. By the campaign, Westpac successfully increased its funds under management in the BT accounts by almost $650 million. The heart of the appeal concerned whether Westpac’s campaign (in particular by the telephone calls) involved the provision of financial product advice and, if so, whether that financial product advice should properly be characterised as personal advice or general advice. The campaign involved calls to more than 95,000 customers but ASIC’s case at trial was determined on the basis of sample calls to 15 customers (although on appeal the call to one of the customers was no longer relied on). 

Trial judge and main issues on appeal

In summary, the trial judge found:

a) Westpac’s telephone communications involved the provision of “financial product advice” within the meaning of s766B(1) of the Act. Westpac’s cross-appeal included this threshold issue

b) This “financial product advice” in the telephone calls was “general advice” (s766B(4)), and not “personal advice” within the meaning of s766B(3) of the Act. This conclusion was the subject of ASIC’s appeal

c) If there was personal advice, there were contraventions of provisions such as to provide services efficiently, honestly and fairly (s912A(1)(a)) and the duty to act in the best interests of the customers (s912B(1)). This also formed part of the cross-appeal.

In three separate judgments, the Full Court (comprising Allsop CJ, Jagot J and O’Bryan J) allowed ASIC’s appeal and dismissed the cross-appeal.

Issue 1 – “financial product advice”

On the threshold issue, having regard to components of the definition of “financial product advice” in s766B(1) of the Act, what had to be established was that Westpac, by the telephone calls, 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 his or her BT account. 

Each of the judges held that the telephone communications amounted to financial product advice as defined in s766B(1) on the basis of there being both a “recommendation” and a “statement of opinion” as to the required matters. See Allsop CJ at [67], Jagot J at [234]-[240] and O’Bryan J at [340]-[349]. This was despite the callers not expressly making any recommendation or statement of opinion and there were marketing elements to the calls. The Full Court rejected the distinction that Westpac sought to draw between advertising/marketing, on the one hand, and advice on the other hand (Allsop CJ at [22] and [67] and Jagot J at [218]; see also O’Bryan J at [338]-[339]). Communications could involve both elements.

Issue 2 – “personal advice” or “general advice”

Relevantly, under s766B(2), “personal advice” is financial product advice given or directed to a person where “the provider of the advice has considered one or more of the person’s objectives, financial situation and needs” or “a reasonable person might expect the provider to have considered one or more of those matters”. Under s766B(4), “general advice” is financial product advice that is not personal advice.

ASIC succeeded in its appeal grounds that Westpac’s campaign involved the provision of “personal advice” within the meaning of s766B(2) of the Act. See Allsop CJ at [75]-[146], Jagot J at [241]-[280] and O’Bryan J at [381]-[398]. This was despite the fact that, in each call, the caller said (following the call script) words to the effect that everything being discussed would be general in nature and wouldn’t take into account the customer’s personal needs.

On this key issue in the appeal, the Chief Justice summarised his conclusion at [5]: “. . . 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. It was marketing by telephone selling. 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 funds held by the customer. Westpac attempted, assiduously, to get the customer to make a decision to move funds to BT without giving personal financial product advice as defined in the legislation. It failed. It gave personal advice, because when the telephone exchanges are considered as a whole and 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 . . .” 

Each of the judges considered that there were errors in aspects of the primary’s construction of elements of the statutory definition of “personal advice” in s766B of the Act. The various issues of construction were addressed by Allsop CJ at [13]-[30], Jagot J at [241]-[260] and O’Bryan J at [360]-[380]. 

Issue 3 – contraventions

The Full Court held that Westpac contravened a number of provisions that applied where there is personal advice. Most attention was given to the duty to act in the best interests of customers (s961B(1)) and to do all things necessary to provide services efficiently, honestly and fairly (s912A(1). See Allsop CJ at [147]-[176], Jagot J at [286]-[302] and O’Bryan J at [404]-[428]. 

The Court made strong statements about Westpac’s conduct. For instance, O’Bryan J said at [427]: “. . . Westpac took unfair advantage of that asymmetry [of knowledge] by implementing a carefully crafted telephone campaign, reinforcing in the minds of its customers an erroneous assumption that the decision to consolidate their superannuation into a Westpac fund was straightforward and was likely to generate benefits for the customer by saving fees and by reducing the burden of managing superannuation. The telephone campaign was directed to persons with whom Westpac had an existing relationship and in a real sense occupied a position of trust with respect to the customer’s superannuation fund.

 Despite knowing that the decision was not straightforward, Westpac did not advise its customers about the matters that they should consider before deciding to consolidate their superannuation. Nor did Westpac even suggest to its customers that they reflect on the decision or seek advice about the decision. Through the campaign, Westpac pursued its own self-interest and disregarded the best interests of its customers. That conduct can rightly be described as unfair and involved a contravention of s912A(1)(a) of the Act”.

The other two judges referred to calculated or systemic sharpness in the campaign’s practices (at [174] per Allsop CJ and [290] per Jagot J)).

Next steps

At the time of writing this summary, the Court had not made the declarations and other orders consequential on allowing ASIC’s appeal and dismissing the cross-appeal. It is apparent that the matter will need to be remitted to the trial judge for the fixing of pecuniary penalties and other matters. It will be interesting to see if Westpac and BT Funds Management seek special leave to appeal to the High Court from the Full Court’s decision. 

Dan Star QC is a Senior Counsel at the Victorian Bar, ph (03) 9225 8757 or email

The full version of these judgments can be found at Numbers in square brackets refer to paragraph numbers in the judgment.

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