Know the difference between ‘general advice’ and ‘personal advice’: ASIC v Westpac Securities Administration Ltd

It is very important for Australian Financial Services (AFS) licensees to know the difference between general advice and personal advice to make sure they do not breach their AFS licence conditions.1

Some AFS licensees are licensed to provide financial services advice to wholesale clients only; others to retail and wholesale clients, but general advice only; and still others to retail and wholesale clients, both general and personal advice.

If an AFS licensee is licensed to provide personal advice to retail clients then they are subject to higher regulatory requirements including a requirement to issue a “Statement of Advice” which is in compliance with the Corporations Act 2001 (Cth) (Act) and includes information about:

  • the basis on which the advice is or was given;
  • the remuneration or other benefits that the licensee will or might receive; and
  • any other interest or association that is, or might reasonably be expected to be, capable of influencing the licensee in providing the advice.2

An AFS licensee providing general advice to a retail client is required to warn the client that:

  • the advice has been prepared without taking account of the client’s objectives, financial situation or needs; and
  • because of that, the client should, before acting on the advice, consider the appropriateness of the advice, having regard to their objectives, financial situation and needs.3 

Where an AFS Licensee is only licensed to provide general advice to retail clients, it must be careful not to pitch its promotion of financial products to retail clients so that the promotion crosses the line from being general advice to personal advice. The recent Federal Court proceedings brought by ASIC against a Westpac entity is relevant in this regard.4 To start with, we note that the relevant Westpac entities in the case were licensed to provide general advice only to retail clients, not personal advice.

The case concerned the offer by Westpac to existing members of BT Funds, a subsidiary of the broader Westpac Group, of a free superannuation consolidation service whereby the member’s external superannuation accounts could be rolled- over into the member’s BT superannuation account. In promoting the service to members, telemarketers were told to ask questions like “What do you look for in a super fund?”, What’s important to you in a super fund?”, “What do you care about in a super fund?” and “What do you see as the benefits of combining your super?”, and then link the members’ personal motivations to the product being offered. Another technique adopted was the use of ‘social proofing’, in which members were strategically told their beliefs were commonly held, to encourage them to accept the consolidation service.

A key issue before the court was: did Westpac give the members general advice or did they stray into the realms of giving personal advice?

Despite employing these artful sales tactics designed to resonate personally with the customer, the court found that the advice given by the Westpac telemarketers in the course of promoting the superannuation consolidation service was nonetheless general advice, and did not attract the level of “intellectual engagement” required to constitute personal advice at law.

Under the Act, “personal advice” essentially refers to advice that has been given or directed to a person in circumstances where the provider has “considered one or more of the person’s objectives, financial situation and needs” (or which a reasonable person might have expected the provider to have considered before giving such advice), and general advice is anything that is not personal advice.

After due consideration of this definition, her Honour, Justice Gleeson, said:

“In my view, the word “considered” refers to an active process of evaluating or reflecting upon the subject matter of the consideration, appropriate to the provision of “financial product advice”. It does not require a process that is “detailed, extensive or careful”, however, it does involve an intellectual engagement with the subject matter of the consideration.”(emphasis added) 

“Mere knowledge of facts about customers, particularly that they held multiple superannuation accounts, and an intention to persuade the customer to accept the rollover service does not support an inference that the caller engaged in any reflection upon the customer’s position that amounted to “consideration”. Active listening does not evidence an intellectual engagement with the information provided by a customer, such as would permit a finding that the caller had “considered” that information: it simply demonstrates that the information has been heard. The use of facts, apparently identified as matters that might be used to influence the customer in the course of the call does not, without more, indicate the caller “considered” those facts.”6

On the issue of whose “objectives, financial situation or needs” needed to have been considered for advice to constitute personal advice, her Honour said:

The relevant “objectives, financial situation and needs” are “the person’s objectives, financial situation and needs”. In my view, that would not include aims that are universal, such as the aim of avoiding the unnecessary payment of fees or the aim of having one’s super arranged in a way that is as easily tracked and managed as possible.”9

However, her Honour emphasised the overarching obligation of financial services providers to do all things necessary to ensure financial services are provided “efficiently, honestly and fairly8, and found on the facts that Westpac had breached this obligation in conducting its superannuation consolidation campaign.

It follows that AFS licensees who are product issuers and promoters will have to be vigilant in ensuring that, in promoting their financial products to retail clients, their representatives do not give customers the impression that they have taken into account the customers’ personal objectives, financial situation and needs.

Further clarification as to the dividing line between personal and general advice is being sought by the ASIC, which has filed an appeal to Justice Gleeson’s decision with the Federal Court. In its media release on the matter, ASIC Deputy Chair Daniel Crennan QC said:

“[This issue] directly impacts the standard of advice received by consumers. This is why ASIC brought this test case and ASIC believes further consideration by the Full Court of the Federal Court is necessary to better inform consumers and industry”.9

1. Both the Financial System Inquiry and Productivity Commission have recommended that the term “general advice” be replaced by some other words, on the basis that it is misleading. ASIC has now expressed a similar view, indicating that renaming “general advice” would be a useful first step in protecting consumers who receive general advice.  This follows research that showed continuing confusion among consumers as to what constitutes “general advice” and what constitutes “personal advice”: ASIC Report 614: ‘Financial Advice: Mind the gap’, 28 March 2019.
2. Corporations Act 2001 (Cth), s 947B.
3. Corporations Act 2001 (Cth), s 949A.
4. Australian Securities and Investments Commission (ASIC) v Westpac Securities Administration Ltd [2018] FCA 2078 (ASIC v Westpac).
5. ASIC v Westpac, [127].
6. ASIC v Westpac, [386].
7. ASIC v Westpac, [121].
8. Corporations Act 2001 (Cth), s 912A(1)(a).
9. ASIC media release, ‘ASIC to appeal Westpac subsidiaries Federal Court Decision’ 18 February 2019 <>. 

Liability limited by a scheme approved under Professional Standards Legislation.
© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice.

Liability limited by a scheme approved under Professional Standards Legislation.
© ADDISONS. No part of this document may in any form or by any means be reproduced, stored in a retrieval system or transmitted without prior written consent. This document is for general information only and cannot be relied upon as legal advice.

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