Subscribe Sitemap
Subscribe Sitemap

HCA delivers key decision – financial product advice given to fund members was personal advice under the Corporations Act

  • Newsletter Article
  • Published 08.04.2021
Westpac Securities Administration Ltd & Anor v Australian Securities and Investments Commission (HCA 2021)

Key Takeaways

The Corporations Act 2001 (the Act) imposes more onerous duties and disclosure requirements on financial services licensees providing financial product advice in the nature of personal (rather than general) advice. Accordingly, licensees need to be mindful of the characteristics of personal advice in order to comply with their duties under the Act and avoid breaching the terms of their license. The HCA has now provided welcome guidance on this issue.

Personal advice under the Act will be determined having regard to the context and circumstances in which such advice was given, including the subject matter of the advice, the relationship between the parties and the purpose, tenor, form and content of the advice. Critically, advice given with a warning that personal circumstances are not taken into account in giving the financial product advice may still be personal advice within the meaning of the Act if in substance, the nature and content of the advice is actually personal advice.

Brief Facts

Westpac (the bank) held an Australian Financial Services Licence under the Act. The licence authorised it to provide financial services, including some financial product advice in the course of carrying on a financial services business in Australia. It was not licensed to provide ‘personal advice’ in relation to superannuation products within the meaning of s766B of the Act.

The bank contacted a number of existing members of its superannuation funds concerning the rollover of their external superannuation accounts into their bank related superannuation accounts (the bank related superannuation accounts). Following a letter inviting members to request that the bank locate any external accounts, the bank's advisers then contacted members by telephone. The primary and common features of these calls were that members were: warned that the discussion was general and would not take into account their personal financial needs, told that the caller wished to help the member, asked what they saw as the main benefits of consolidating their superannuation funds, and told that their beliefs or reasons were commonly held before being offered help to rollover their other accounts into the bank related superannuation accounts.

The issue was whether the bank had given its members financial product advice in the nature of personal advice (rather than general advice) and therefore breached its licence and the Act.

ASIC issued proceedings against the bank for the alleged breaches. The Full Court of the FCA found in favour of ASIC and held that in contacting members regarding the rollover of their superannuation accounts, the bank had given personal advice within the meaning of s766B(3)(b) of the Act.

The bank appealed to the HCA.


The HCA dismissed the appeal and found that the bank had indeed provided personal advice in the calls made to its members about their superannuation accounts. In doing so, the bank had breached the conditions of its licence as well as its duties to provide financial services ‘efficiently, honestly and fairly(s912A(a)) and failed to act in the best interests of the client in relation to the advice’ (s961B(1)).

Financial product advice’ is defined in s766B(1) as a recommendation or statement of opinion that is intended to influence a person in making a decision in relation to a financial product, or could reasonably be regarded as being intended to have such an influence. In the appeal, the bank conceded that it had provided financial product advice within the meaning of the Act in its telephone calls to members. That is, a recommendation was given (that the member should rollover their external accounts into the bank related superannuation accounts) with the intention to influence the member to do so.

In determining whether this was general or personal advice (general advice being advice that is not personal advice), the HCA had regard to s766B(3) of the Act which states that ‘personal advice’ is:

financial product advice that is given or directed to a person (including by electronic means) in circumstances where:

(a) the provider of the advice has considered one or more of the person's objectives, financial situation and needs ...; or

(b) a reasonable person might expect the provider to have considered one or more of those matters.’

The advisers had not considered one or more of the members’ objectives, financial situation and needs so the judgment focussed on whether a reasonable person might expect’ the bank to have done so. In reaching its conclusion that the answer is ‘yes’, the Court found that:

the subject matter of the advice, the nature of the relationship between Westpac and its members, the purpose and tenor of the calls, and the members’ objectives, together with the form, content and context of the financial product advice… compel the conclusion that the… advice was personal advice…

Specifically, the Court had regard to the following factors:

  • the subject matter of the advice concerned a significant financial decision about consolidating multiple superannuation accounts;
  • there was a pre-existing relationship in the nature of trustee and beneficiary between the bank and the members it had contacted;
  • given the relationship, a reasonable person would expect the advisor to have access to all of their relevant information known to the bank;
  • the tone and tenor of the calls emphasised a desire to help members with their superannuation; and
  • in eliciting from members their financial objectives in superannuation which are personal in nature and included things like maximising financial returns and minimising fees, a reasonable person might expect that these objectives would be considered by the bank in any subsequent financial product advice.

The Court held that consideration (or reasonable expectation) of only one of the matters listed in the Act – the person’s objectives, financial situation or needs – was sufficient to invoke the personal advice provisions of s766B(3). In addition, the requirement that a reasonable person ‘might’ expect such consideration is a lower threshold than a requirement that they would’ expect such matters to have been considered. That is consistent with the consumer protection objectives of this part of the Act.

The Court rejected the bank’s defence that it had issued a general warning at the beginning of each call that personal circumstances were not considered. It did so because firstly, this was inconsistent with subsequent questions specifically asking about the member’s personal objectives and secondly, members were not then encouraged to seek personal advice before deciding on whether or not to rollover their accounts.

The fact that the advice was provided without charge did not impact the Court’s conclusion of personal advice because the relevant members were already paying fees to the bank and the recommended rollover was clearly in the bank’s financial interests. In those circumstances, a reasonable person might expect that a fee for the provision of personal advice was less likely.

Accordingly, the advice given by the bank to each member it had contacted was intended to influence them in making a decision on an important financial product in circumstances where a reasonable person might expect the bank to have considered one or more of the member’s objectives, financial situation and needs. It was therefore, personal advice.


This decision obviously relevantly provides definitive guidance on the distinction between general and personal advice in the provision of financial product advice and to that extent has been welcomed by the regulator and financial service provider alike.

The provision of personal advice attracts a higher level of responsibility to customers, for example in providing a written statement of advice, and importantly, also attracts duties such as a duty to act in the best interests of the customer in relation to that advice.

It follows that when providing financial product advice, licensees need to ensure that such advice is truly either general or personal advice, having regard to the factors identified in this judgment. In the case of personal advice, providers must be mindful to comply with the more stringent legislative requirements under the Act.