It’s personal: the High Court’s finding against Westpac and what it means for financial advice providers

In an eagerly-awaited decision, the High Court last week unanimously upheld the Full Federal Court’s 2019 finding that two Westpac group companies provided personal advice to members of Westpac super funds during phone calls to members about rolling over their super.1

This is a significant judgment for all financial advice providers and their representatives. The High Court has provided important guidance about when financial advice will be “personal advice”, rather than merely “general advice”. In doing so, the High Court has clarified when advice providers and their representatives will need to have a “personal advice” authorisation and comply with the more extensive disclosure and other obligations that apply to giving personal advice.

While the line between personal and general advice won’t always be easy to draw in specific cases, the High Court’s view is loud and clear: the personal/general advice distinction is there to protect vulnerable consumers and will be interpreted accordingly, taking into account all of the circumstances surrounding the advice and how it is provided.

A quick recap

Two Westpac group companies (Westpac), Westpac Securities Administration Ltd and BT Funds Management Ltd, contacted existing members of Westpac super funds in writing and by phone, offering to roll over the members’ external super accounts into their Westpac super accounts.

At the start of the phone calls, members were given a “general advice warning” to the effect that everything discussed on the call would be general in nature and would not take into account their personal financial needs. However, during the phone calls, members were asked about their objectives and what they saw as the main benefits of rolling over their super. On the calls, Westpac representatives also made statements to the effect that by rolling over their external super into their Westpac super accounts, the members could or may save on fees, improve the ‘manageability’ of their superannuation, and get a better return on their super or improve their super performance.

So far, so good. The problem, however, was that the Westpac companies were only authorised under their Australian financial services licences to provide general advice, and not personal advice. The question for the High Court was whether the Westpac’s representatives’ phone calls overstepped the bounds of general advice into personal advice (breaching the licence authorisations and other financial services laws).

Like the Full Federal Court, the High Court’s answer was “yes”. The phone calls made to existing members were “personal advice”, outside the scope of what Westpac was authorised to provide.

High Court comments on the personal advice test

The test in the Corporations Act 2001 (Cth) for whether financial product advice is “personal advice” is whether the advice is given or directed to a person in circumstances where:

  • the provider of the advice has considered one or more of the person’s objectives, financial situation and needs; or
  • a reasonable person might expect the provider to have considered one or more of those matters.

The High Court’s attention was mainly on the second part of the test: did the Westpac representatives provide advice during their calls to members in circumstances where a reasonable person might expect Westpac to have considered one or more of the member’s objectives, financial situation and needs?

In answering “yes” to this question, the High Court has highlighted some useful principles relating to various elements of the personal advice test. These include the following:

  • Surrounding circumstances: the “reasonable person” part of the test is an objective test assessed at the time the advice was given, and having regard to the circumstances in which that advice was given.
  • Might expect”: the standard imposed by the words “might expect” is a fairly low one – in the High Court’s words, the standard is one of “reasonable possibility, not reasonable probability”.
  • Considered”: this word also imposes a relatively undemanding standard. It doesn’t mean that a reasonable person might expect the advice provider to have actively evaluated or reflected on the person’s circumstances in providing the advice. It also captures where a reasonable person might expect the advice provider to have simply “had regard to, or given attention to” their personal circumstances.
  • One or more of”: the wording “one or more of the person’s objectives, financial situation and needs” does not require the adviser to consider all of these three categories, nor all of the aspects of any one category (for example, if an adviser has considered just one of the person’s objectives, then this will be satisfied).
  • It’s personal: the relevant “objectives, financial situation and needs” must be personal (in the sense that they are the person’s), rather than universal or generic. However, objectives “do not cease to be personal objectives merely because those objectives are generally applicable to all or most persons in the position of the client as well as to the particular client”.
  • General advice warnings – not a ‘get out of jail free’ card: giving a “general advice warning” will not necessarily prevent advice from being personal advice – the significance of the warning must be assessed in light of all the circumstances. Indeed, those circumstances can effectively overwhelm the effectiveness of a general advice warning.

Why the phone calls amounted to personal advice

Applying the above principles in the circumstances of the case, the High Court determined that Westpac representatives provided personal advice in their calls to existing members. Some of the factors that the High Court thought relevant were:

  • The subject matter of the advice concerned “a significant financial decision” for the member – namely, consolidating their multiple super accounts.
  • There was a pre-existing relationship between the members and Westpac. Westpac held members’ super accounts as trustee for the members, and was required by super legislation to perform its duties and exercise its powers in members’ best interests. This meant that a reasonable person might expect that Westpac would act in the member’s best interests, including by considering their personal circumstances.
  • Members were expressly asked about their objectives and responded accordingly (for example, members’ responses included maximising super returns / performance, minimising fees, and assisting with super management). These were “personal” objectives and so “a reasonable person might expect that the objectives articulated were relevant to, and would be considered by Westpac in, the provision of any subsequent financial product advice”.
  • Although members were given a general advice warning, it was given only once at the beginning of the call, after which members were asked directly about their personal objectives and were not encouraged to seek personal advice before deciding whether to accept the super roll over.

In affirming the Full Federal Court’s decision and articulating the fundamental principles relevant to the personal advice test, the High Court confirmed that it is a relatively low bar for financial product advice to transition from general advice to personal advice. The fact that a clear general advice warning can be negated by the surrounding circumstances in which the advice is given shows that courts will focus on substance rather than form. Consequently, ensuring that financial product advice intended to be given as general advice (rather than personal advice) actually satisfies the general advice requirements is far more than a box-ticking exercise.

Financial product advice providers would be wise to review their processes, procedures and scripts to ensure that they are in fact providing the kind of advice they intend to provide.

If you would like further guidance about determining whether your financial advice business is providing personal or general advice, and what requirements apply, please get in touch.


1.Westpac Securities Administration Ltd & Anor v Australian Securities and Investments Commission [2021] HCA 3.


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