Westpac hit with $10.5m penalty for super rollover advice
The Federal Court has handed down a penalty of $10.5 million to Westpac for a campaign that encouraged members to roll over their external superannuation accounts which breached best interest obligations.
The Federal Court of Australia has ordered Westpac Bank subsidiaries Westpac Securities Administration Limited (Westpac Securities) and BT Funds Management Limited (BT Funds) to pay a combined penalty of $10.5 million for failing to act in their clients’ best interests.
The penalty follows the High Court’s unanimous decision on 3 February 2021 that Westpac Securities and BT Funds breached their best interests duty when they provided personal financial product advice in calls made to 14 customers, despite neither firm being licensed to provide personal advice.
ASIC commissioner Danielle Press said Westpac was actively conducting a sales campaign aimed at rolling customers from their existing superannuation accounts into Westpac superannuation products. In doing this, Westpac failed to act in the best interests of their customers.
“Consumers’ decisions about their superannuation are significant, long-term financial decisions affecting their retirement income. Financial institutions seeking to influence those decisions by providing financial product advice must comply with the law designed to protect consumers,” Commissioner Press said.
“The penalty of $10.5 million handed down related to calls made to just 14 consumers should act as a strong deterrent to any entity breaching these provisions of the law.”
An ASIC investigation found that Westpac Securities and BT Funds conducted two telephone campaigns which recommended that customers roll out of their other superannuation funds into a Westpac-related superannuation account.
Westpac Securities and BT Funds have been ordered to pay a $7.5 million and a $3 million penalty, respectively.
ASIC’s penalty case focused on calls to 14 consumers and the maximum penalty for the breaches was $14 million. As a result of the campaigns conducted by Westpac, it increased its funds under management by almost $650 million between 1 January 2013 and 16 September 2016.
During the campaign period, in excess of 30,000 customers deposited funds into Westpac superannuation accounts.
ASIC commenced civil penalty proceedings against Westpac Securities and BT Funds on 22 December 2016 for unlicensed personal financial product advice. The matter was heard in February 2018.
On 21 December 2018, the Federal Court found that Westpac Securities and BT Funds breached their obligation under the Corporations Act to act honestly, efficiently and fairly, but that ASIC did not make out its case that personal advice was provided to 15 customers.
On 28 October 2019, the Full Court of the Federal Court of Australia then reversed the decision and unanimously found that personal advice had been given to 14 customers.
Tony Zhang
Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.
Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.
