A recent Federal Court decision involving Westpac and BT Funds has far-reaching consequences for the financial services sector and those advising clients about new products or opportunities. In this article, partner Selina Nutley explains what you need to know and the impact on the financial services sector.
In previous editions of Fundamental, we have written about the proceedings brought by ASIC against Westpac and BT Funds.
The Federal Court found that while Westpac provided a 'recommendation' or 'statement of opinion' amounting to financial product advice, it had not provided personal advice (in breach of its AFSL's authorisations), but it did fail to provide financial services 'efficiently, honestly and fairly'.
Both Westpac and ASIC appealed the Federal Court's findings.
On 28 October, the Full Federal Court handed down its judgment in the appeal. All three members found in ASIC's favour and dismissed Westpac's cross-appeal. Here are the key points you need to understand:
The court has reaffirmed that the mere delivery of a general advice warning is insufficient if the greater context of the conversation engenders an expectation the client's personal circumstances have been considered. Given ASIC's new 'Why not litigate?' stance, we expect it to bring further cases in similar circumstances.
It remains to be seen whether Westpac will appeal the decision to the High Court.
Our lawyers can help with your queries and provide a presentation to your team explaining the framework around personal advice, general advice and the conduct of marketing campaigns following this recent decision. Please contact us if you are interested in this training for your business.