ASIC has commenced civil penalty proceedings in the Federal Court against Westpac subsidiaries Westpac Securities Administration Limited (WSAL) and BT Funds Management Limited (BTFM) for a number of contraventions, including failures of the 'best interests duty' introduced under the Future of Financial Advice reforms.
The proceedings follow an ASIC investigation into Westpac's telephone sales campaigns targeting superannuation fund members. Specifically, ASIC's case sets out 15 examples of alleged contraventions of the 'best interests duty' arising from two telephone campaigns instigated by WSAL and BTFM.
ASIC alleges that during the two telephone campaigns, WSAL and BTFM provided personal financial product advice to customers, specifically recommending that customers roll out of their other superannuation funds into their Westpac-related superannuation accounts. WSAL and BTFM are not permitted to provide personal financial product advice under their Australian financial services licences. Further, ASIC alleges that WSAL and BTFM did not undertake a proper comparison of the superannuation funds as required by law.
The law provides enhanced consumer protections and imposes greater obligations on financial advice licensees when they provide personal advice.
ASIC also alleges that WSAL and BTFM have:
- failed to do all things necessary to ensure that the financial services covered by their licences are provided efficiently, honestly and fairly;
- failed to comply with the conditions of their licences which only permits those licensees to provide general advice; and
- failed to comply with the financial services laws in the Corporations Act.
ASIC and Westpac will continue to cooperate to limit the facts in dispute in the proceedings. The first hearing for the proceedings will be on 2 February 2017 at 9.30am in the Federal Court in Sydney.
These proceedings form part of ASIC's Wealth Management Project, focusing on the wealth divisions of the major banks, AMP and Macquarie (refer: 15-081MR).
Editor's note 1
On 15 March 2017, the Court made orders by consent setting out a timetable for filing of evidence in the case. The matter is listed for a further Case Management Hearing in the Federal Court in Sydney on 26 July 2017.
Editor's note 2
At a hearing on 26 July 2017, a trial date of 5 February 2018 was set down on an estimate of five days, with closing submissions to be heard on 16 February 2018. A further pre-trial hearing is set for 25 September 2017.
Editor's note 3:
The trial concluded with closing submissions on 16 February 2018. Judgment has been reserved.