Posted February 19, 2021

Posted By Meghann Cannon

Let’s get personal! High Court gives broad interpretation of personal financial advice

Prepared by Jodi Ainsworth

A recent decision by the High Court of Australia in Westpac Securities Administration Ltd v Australian Securities and Investments Commission has clarified the difference between general and personal financial advice, and in doing so, provides a reminder of the risk of inadvertently providing personal advice. 

The facts (very briefly!) 

Westpac conducted a campaign to encourage existing clients to roll other superannuation accounts into their BT account. The Westpac subsidiaries wrote to and called 14 clients to inform these clients of the roll-over option. The Westpac representatives provided a general advice disclaimer upfront to the clients, but then appear to have asked about the client’s personal objectives, with “saving on fees” and “improving manageability” being drawn out as objectives across the group. 

The recommendations given to proceed with the roll-over were upheld by the High Court as personal financial product advice, which was outside the scope of Westpac’s authorisations. There is no decision yet on what penalties Westpac may face – this will considered at a later date by the Federal Court.

What do I need to know?

Arising from this case, the key question for advisers to consider is – would a reasonable person in the client’s shoes expect an adviser to have considered at least one of the client’s objectives, financial situation or needs, in giving the advice? If the answer is yes, the advice is personal financial advice even if the adviser has not in fact considered these. 

To help answer this question, the Court gave the following guidance on personal advice:

  • A general advice disclaimer may not be enough. You can’t hide behind a general advice disclaimer when you are in fact providing personal advice. Whilst undoubtably there is a place for disclaimers, in Westpac’s case the disclaimer was not in itself sufficient to categorise the advice as general advice.

  • Free” advice can still be personal. Even if no fees are specifically charged for the advice, it can still be personal advice.

  • Even if there is no comprehensive client evaluation, advice can be personal. Personal advice is given when the provider considers one or more of the person’s objectives, financial situation and needs. The provider does not need to comprehensively evaluate all of these in order for the advice to be classified as personal advice.

  • Generic advice applicable to a group can still be personal. Even where the advice is generally applicable to “all or most persons in the position of the client”, it can still be personal rather than general advice.  In this case, these “generic” personal objectives were “saving on fees” and improving manageability”.

  • Client expectations based on the AFSL holder’s experience and expertise in financial matters are relevant. A client may reasonably expect that a representative would take into account their personal objectives in providing the advice, given the nature of the AFSL holder’s business (such as in the case of Westpac). 

Why does this matter?

Inadvertently providing personal advice, rather than general advice, has major potential consequences for AFS licensees:

  1. If the licensee is not authorised to provide personal advice (as in Westpac’s case), this would be a breach of their licence and financial services law. This is a consideration even for AFSL holders who are only authorised to provide services to wholesale clients. 
  2. Even if they are authorised to provide personal financial advice under their AFSL, in mis-categorising the advice they may not comply with the more onerous personal advice obligations. Again, this would be in breach of their licence and financial services law. 

In our experience, a main area of risk for financial advisers is marketing communications directed to existing clients e.g., newsletters, flyers and website content. These clients may reasonably expect that you are taking their circumstances into account in providing advice, and you should clarify with them that you have not in fact done so. 

AFSL holders who issue financial products should also be clear on the nature of any advice given in promotion campaigns for their products.  

ASIC has stated that it is committed to enforcement, with actions to be brought “against misconduct, including advice that is not in the best interest of clients”, especially in relation to superannuation advice. 

In terms of upcoming financial services reform, it will be interesting to see if ASIC’s takes this case into consideration in its current review of advice affordability. Watch this space!

ASIC’s media release, including a link to the High Court’s decision, is available at:


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