Back in February, ASIC claimed victory over Westpac after the latter lost its appeal to the High Court regarding charges that it had breached financial services laws pertaining to the provision of personal advice.
The breaches involved two Westpac phone campaigns allegedly encouraging customers to roll their superannuation into Westpac-affiliated super accounts. These campaigns, ASIC said, resulted in a $650 million boost in Westpac's FUM between January 2013 and September 2016. What was in contention was whether or not these campaigns could reasonably be interpreted as personal advice.
The Corporations Act defines personal advice as being advice where:
It is the second point that stirred up trouble for Westpac. The High Court found that a "reasonable person" might have expected the phone campaign to have considered their "objectives, financial situation and needs" for three reasons:
ASIC commissioner Danielle Press described the High Court's decision as "[providing] clarity concerning the differences between personal advice and general advice."
So what has it clarified? Well, first off, providing personal advice that's intended as general advice (even accidentally) could cost an adviser dearly. It also suggests that the kind of disclaimers offered by many AFSLs regarding general advice - including those offered in Westpac's phone campaigns - might not be enough if a reasonable person could interpret the advice as being personal.
This is a serious issue to consider if you, like many advisers now, are using mass marketing/communications campaigns to reach out to current or prospective clients. Whether it's via email, social, phone or some other channel, you run the risk of these campaigns being interpreted by customers (and possibly the courts) as personal advice if you aren't clear enough.
As Press put it: "By clarifying the distinction between tailored, quality, personal advice in the customer’s interest, and general advice given via a sales campaign, [the High Court's] judgement will provide clear guidance to those financial institutions that develop campaigns to sell financial products through direct approaches to retail clients."
She added: "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 decision[s]’ and ASIC has a focus to lift standards in this area.’"
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