Australia: Financial Product Advice - What Was General Is Now Personal

Last Updated: 4 November 2019
Article by Austin Bell and Geoffrey Li

On 28 October 2019, the Full Court of the Federal Court published its judgment in Australian Securities and Investment Commission v Westpac Securities Administration Limited [2019] FCAFC 187 (ASIC v Westpac). In separate judgments written by Allsop CJ, Jagot and O'Bryan JJ, the Full Court unanimously overturned the part of the first instance judgment pertaining to personal advice. Their honours held that personal advice was given to all of the 15 customers at issue, not merely general advice as held at first instance. The Full Court also upheld the finding that the respondent had breached section 912A1, focussing on the unfairness of the respondent's conduct.

Key points

Personal advice

  • The part of the definition of personal advice in section 766B(3)(b) (ie what a reasonable person might expect) requires an enquiry as to whether, in the circumstances of giving the advice, a reasonable person might expect one or more relevant matters to have been considered in the giving of that advice. This reasonable person cannot be imbued with knowledge of circumstances that the recipient of the advice could not have known.
  • An adviser 'considers' a relevant matter if that adviser merely gives regard to or takes into account that relevant matter. There is no threshold of analysis or intellectual engagement beyond that which the usual or ordinary meaning of 'consider' would permit. No temporal element should be read into the word 'consider'.
  • Merely providing a warning that the advice is general advice will not mean that the advice is not personal advice. Further, the effectiveness of a general advice warning is diminished if it is given at the outset of a conversation and is not reinforced at any other point in the conversation.

Best interests duty

  • If an adviser has, in fact, provided personal advice, even if they only intended to provide general advice, they will be subject to the best interests duty in section 961B. In this case, the Full Court held that the respondents had not complied with it.
  • Allsop CJ held, in obiter, that the obligation of a financial advisor to act in the best interests of a client draws on the concepts of fiduciary loyalty commonly resting on persons in such a position. His Honour went on to state that the circumstances that will lead to a conclusion that a provider of personal advice did not act in the best interests of his or her client may be drawn 'in part' from the list of factors in section 961B(2), but the source of equitable faithfulness of the duty in section 961B(1) should also be recognised in the content of the phrase and the possible circumstances of its contravention.

Efficiently, honestly and fairly

  • Providing personal advice under a general advice model is a breach of the requirement of section 912A(1) to provide financial services 'efficiently, honestly and fairly'. Seemingly, so too, is devising and implementing a programme to provide general advice where personal advice should have been provided.
  • The Full Court did not upset the existing jurisprudence that 'efficiently, honestly and fairly' in section 912A(1) is a compendious phrase, to be applied as a single composite concept. An examination of this was left for a later case. However, Allsop CJ held that, a body of deliberate and carefully planned conduct that can be characterised as unfair may suffice to constitute a breach of 912A(1)(a), even if it cannot be described as dishonest.


ASIC v Westpac is likely to have significant implications for providers of financial product advice in Australia. Advice providers should review all aspects of their models under which advice is provided. Models that were previously developed relying on ASIC policy, such as that set out in ASIC Regulatory Guides 175 and 244, may need to be revised to reflect the findings in this case.

Australian financial services (AFS) licensees that are only authorised to provide general financial product advice should examine whether their conduct amounts to providing personal advice that is not authorised under their AFS licence. Financial product advice may be personal advice, even if an adviser, in actual fact, does not take into account the recipient's objectives, financial situation and needs, and also gives a warning that the advice is merely general advice. Financial product advice will be considered personal advice, if, on balance and having regard to all relevant factors, a reasonable person in the position of the recipient might expect the advice provider to have taken into account one or more of the recipient's objectives, financial situation and needs.

AFS licensees should not limit their examination to an enquiry of the expectations of a reasonable person; they should also focus on what the AFS licensee has actually considered. This may be particularly important for AFS licensees that are only authorised to provide general financial product advice to wholesale clients. In the course of providing financial product advice to wholesale clients (who are, in most cases, more financially literate and vocal with their 'objectives, financial situation and needs'), these licensees may have 'considered' (within the meaning given to this term by the Full Court) one or more of their client's objectives, financial situation and needs.

Factual background

In 2013, Westpac Securities Administration Limited and a number of their related bodies corporate (collectively, Westpac Group) instigated a campaign to encourage their customers to roll over external superannuation accounts into Westpac Group superannuation accounts. This campaign involved Westpac Group advisers sending written communications and making follow-up telephone calls to existing Westpac Group customers. These calls were structured pursuant to an internal guideline (Call Framework).

The Call Framework instructed the adviser to (in order):

  1. put the customer in a positive, receptive frame of mind;
  2. gather, uncover, and develop an understanding of the customer's requirements;
  3. conduct a persuasive, interactive presentation based on what the customer revealed during step (2); and
  4. close the sale.

Importantly, the Call Framework also provided that the adviser must expressly warn a customer at the start of the call that the information provided on the call was general in nature and did not take into account the customer's needs or objectives.

The Full Court considered 15 calls made by Westpac Group advisers to existing Westpac Group customers. Each call broadly followed the Call Framework. Each of the advisers were operating under an AFS licence that authorised the provision of general advice only.

Full Court of the Federal Court

The Full Court based its decision on section 766B(3)(b). This section provides that personal advice is financial product advice that is given in circumstances where a reasonable person might expect the provider to have considered one or more of that person's objectives, financial situation and needs.

Although the Full Court agreed with some elements of Gleeson J's judgment at first instance, they disagreed on two material points.

Meaning of 'consider'

At first instance, Gleeson J held that 'consider', as it was used in section 766B, required a certain level of intellectual engagement with the subject matter of the consideration and that it involved an active process of evaluating. Gleeson J held further held that the threshold of 'consider' could not have been satisfied if the recommendation were made in the same call as receiving the relevant information to be considered.

The Full Court disagreed. Its position is possibly best summarised by Jagot J who stated: '[i]t is not necessary to go further to analyse the extent, degree or quality of the consideration; any taking into account of the identified matter will suffice'.2

O'Bryan J held that 'the phrase "active process of evaluating" refers to a particular standard or level of consideration that is not mandated by the statutory language. The further requirement that the evaluation or reflection upon the person's objectives, financial situation and needs "be appropriate to the provision of the financial property advice" adds a further requirement that is not within the statutory language'.3

Expectations of a reasonable person

Gleeson J rejected the proposition that the relevant circumstances to be taken into account when determining what a reasonable person might expect, for the purposes of section 766B(3)(b), were only those circumstances that could have been known by a reasonable person. Her Honour held that section 766B(3) directs attention to all of the relevant circumstances in which the financial product advice was given and that 'section 766B(3)(b) requires an assessment of what a reasonable person would expect in those circumstances'.4

The Full Court disagreed. Allsop CJ held that 'it is difficult to understand how s 766B(3)(b) would operate, as found by the primary judge at [135] of the reasons, by reference to circumstances that could not have been known to a reasonable person'. His Honour went on to opine that one cannot imbue a reasonable person in the customer's position with certain knowledge (in this case, knowledge of the Call Framework under which Westpac Group advisers were giving the advice).5

O'Bryan J stated that '[i]n so far as the primary judge concluded that the expression "a reasonable person" extends beyond a hypothetical reasonable person standing in the recipient's shoes, and extends (as ASIC submitted) to an ordinary member of the community, I respectfully disagree with her Honour. In my view, reading s 766B(3) as a whole, the expression "a reasonable person" contemplates a hypothetical reasonable person standing in the recipient's shoes'.6

O'Bryan J canvassed eight factors when considering what a reasonable person might have expected when standing in the shoes of a customer receiving advice from Westpac Group. These eight factors were:

  1. The advice concerned the customer's superannuation and, specifically, the consequences of consolidating multiple superannuation accounts. For most customers, this is a very significant financial decision.
  2. The calls were made, and the advice was given, on behalf of Westpac Group and the recipients were customers of Westpac Group in the sense that they held Westpac Group superannuation products. Thus, there was an existing customer relationship.
  3. The effect of above factors (1) and (2) is cumulative. An individual that has invested superannuation with an institution would reasonably expect that institution to act for their benefit and in their interests in relation to their superannuation affairs.
  4. During the course of the calls, the callers asked the recipients about the considerations that were relevant to them in deciding whether to consolidate their superannuation accounts. Asking that question would ordinarily create the impression in the mind of the reasonable person receiving the call that the caller sought that information because it was relevant to the matters being discussed.
  5. Each of the calls conveyed an implicit recommendation for the customer to act.
  6. The callers gave a general advice warning.7
  7. The advice was provided free of charge.
  8. In some cases the callers revealed a lack of knowledge about the customer's personal circumstances.

The first five factors led to the conclusion that a hypothetical reasonable recipient of the advice might expect the provider of the advice to have considered one or more of the recipient's objectives, financial situation and needs. The final three factors led to the opposite conclusion. His Honour held that, on balance, having regard to all eight factors set out above, the first five factors outweigh the final three factors; therefore personal advice, not general advice, was given.

In arriving at the same conclusion, Jagot J noted that 's 766B(3)(b) refers to what the reasonable person might expect. This is a lower standard than, for example, what the reasonable person would have expected. The standard is one of reasonable possibility not reasonable probability'.


Advice providers should consider whether the subject matter of their advice requires personal advice, not merely general advice. AFS licensees that are only authorised to provide general advice, including those AFS licensees that are authorised to provide general advice only to wholesale clients, may need to consider expanding their AFS license authorisations.

Financial product advice may be personal advice if, in fact, the provider considers one or more of the recipient's objectives, financial situation and needs. It may also be personal advice if an adviser does not consider the recipient's objectives, financial situation and needs and warns the recipient that the advice is merely general advice. Where an adviser has not, in fact, taken into account one or more of the recipient's objectives, financial situation and needs, financial product advice will still be personal advice, if, on balance and having regard to all relevant factors, a reasonable person in the position of the recipient might expect the adviser to have taken into account one or more of these things.


[1] All sections referred to in this article are sections of the Corporations Act 2001 (Cth).

[2] ASIC v Westpac, [247].

[3] ASIC v Westpac, [375].

[4] Australian Securities and Investments Commission v Westpac Securities Administration Limited, in the matter of Westpac Securities Administration Limited [2018] FCA 2078, [135].

[5] ASIC v Westpac, [30].

[6] ASIC v Westpac, [377].

[7] O'Bryan J held that the force of this factor was somewhat mitigated because the warning was given at the outset of the call. By not reinforcing the warning at any other point in the call, the caller runs the risk that a hypothetical reasonable recipient of the advice will lose sight of the warning in the course of the call.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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