FEDERAL COURT OF AUSTRALIA

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

ORDERS

THE COURT DECLARES THAT:

1.    In its adoption and implementation of the QM Framework in connection with its campaign to encourage customers to roll over superannuation accounts into their account held with the first defendant, the first defendant failed to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly in contravention of s 912A(1)(a) of the Corporations Act 2001 (Cth).

2.    In its adoption and implementation of the QM Framework in connection with its campaign to encourage customers to roll over superannuation accounts into their account held with the second defendant, the second defendant failed to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly in contravention of s 912A(1)(a) of the Act.

THE COURT ORDERS THAT:

3.    The parties file and serve short minutes of orders for the further conduct of the proceeding on or before Thursday 31 January 2019.

4.    The proceeding be listed for a case management hearing on Thursday 7 February 2019 at 9.30 am.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

INDEX

GLEESON J:

Introduction

1    The plaintiff (“ASIC”) claims relief against the defendants (“Westpac”) for alleged contraventions of the Corporations Act 2001 (Cth) (“Act”) in connection with a campaign to encourage customers to roll over superannuation accounts held with other entities (“external accounts”) into their existing accounts with the first defendant (“WSAL”) and the second defendant (“BTFM”) (“BT account”). The campaign included written communications by which Westpac offered its customers a service comprising a free search for other superannuation accounts they might hold (“external accounts”); and telephone calls during which customers, who may or may not have accepted the free search offer, were offered a further service of arranging a rollover of external accounts into the customer’s BT account (“rollover service”).

2    As a result of these efforts, Westpac successfully increased its funds under management (“FUM”) by almost $650 million.

3    ASIC’s case was principally based on telephone calls made to 15 customers during 2014. Each of the 15 customers was a member of either the BT Lifetime Account Fund or the BT Business Account Fund (collectively “BT funds”), held an account in one of those funds (“collectively “BT accounts”) and was a retail client for the purposes of s 761G of the Act.

4    Westpac described its activities as a “plainly self-interested” sales or marketing exercise, by which members of its “Super Activation Team” (see [36] and following below) reiterated “generic” messaging which identified and emphasised desirable features of the rollover service (although Westpac also contended that it was necessary to consider the interactions with the 15 customers separately).

5    However, ASIC argued that the Super Activation Team did not encourage customers to roll over by simply doing these things. Rather, ASIC argued, the team members crossed “an important and clear line”. They encouraged customers by employing a subtle sales technique to make a personal pitch to customers that involved asking a customer about their personal motivations and then linking that to the financial product being offered.

6    ASIC claimed that, contrary to the terms of Australian financial services licences (“AFSLs”) held by each of WSAL and BTFM, Westpac’s technique involved the provision of “financial product advice” that was “personal advice” within the meaning of s 766B(3) of the Act.

7    By this conduct, ASIC contended, the customers were subjected to a risk of harm because they received personal financial product advice which did not take into account all of their relevant personal circumstances. In particular, ASIC noted, had the advice been provided in accordance with the Act’s requirements for the provision of “personal advice”, it may have resulted in customers being advised to maintain their current fund and take no action, for example, to avoid losing part or all of particular types of insurance; or being advised to “roll into” superannuation funds that were in fact more appropriate to their personal circumstances than a BT fund, for example, because they would pay lower fees and/or premiums.

8    ASIC sought declarations to the effect that the defendants’ conduct involved:

(1)    breaches of conditions of their respective AFSLs by providing personal financial product advice in contravention of s 912A(1)(b);

(2)    contraventions of s 946A of the Act, because such personal financial product advice was provided without the provision of a “Statement of Advice” within the meaning of the Act;

(3)    contraventions of s 961K(2) of the Act, because the defendants failed to act in the best interests of the customer for the purposes of s 961B(1);

(4)    contraventions of s 961K(2) of the Act, because the defendants adopted and implemented a “QM Framework” (see [50] below) to provide personal advice to customers to roll over their external accounts into their BT account, regardless of the appropriateness of the BT account to the customer, for the primary purpose of generating FUM for Westpac, and thereby not doing all things necessary to ensure that the financial services covered by the licence were provided “efficiently, honestly and fairly”; and

(5)    per se breaches of s 912A(1)(c) of the Act.

9    Westpac denied any contravention of the Act. As Westpac put it, they simply sought to encourage customers to roll over superannuation into their existing BT account by offering to do it for them on the telephone. The exercise clearly and obviously had a marketing aspect, Westpac argued. According to Westpac, the main issue for the Court was whether, on any of the 15 sets of interactions with their customers, their conduct of what was otherwise a legitimate commercial activity breached the law because it involved the provision of “personal advice” within the meaning of the Act.

Consolidating super funds

10    As a general proposition, there are benefits that accrue to consumers from consolidating multiple superannuation funds. At the relevant times, ASIC itself promoted consolidation on its “Moneysmart” website, on the page “Consolidating super funds”, under the heading “Reduce your super stress”. ASIC encouraged consumers to recognise that holding multiple super funds is a problem, saying relevantly:

How many super statements did you receive this year? Do you find it hard to keep track of your super accounts? Have you lost some of your super over the years? You’re not alone. Here are the steps to take to sort it out and save on fees.

Why you should consolidate your super

The benefits of putting all your small super into one account include:

•    Saving costs by paying only one set of fees

•    Reducing your paperwork

•    Making it easier to keep track of your super

11    The “Moneysmart” website page also makes some important cautionary points that were not routinely made by Westpac during the telephone calls that are the subject of the proceeding:

Before you decide to move funds

Before you consolidate your super funds here are some things to check:

•    Are there any termination fees

•    Will you be able to get the same level of insurance in your chosen fund

•    That your employer can contribute to your chosen fund

12    The “Moneysmart” website also notes that consolidating super funds involves making a choice as to the fund in which multiple funds will be consolidated. It says:

Smart tip

When consolidating your super, don’t just choose the fund with the highest balance. The best fund for you may be one of your small accounts, or a completely new fund.

13    In this case, there was no evidence that any of the relevant 15 customers was disadvantaged by Westpac’s conduct. Conversely, on its own defence, Westpac did not consider the issues identified on the “Moneysmart” website for those customers or routinely advise the customers that those issues warranted consideration before they accepted the rollover service. Accordingly, except to the extent that the 15 customers did it without Westpac’s knowledge, there was no analysis of whether the BT fund was the “best” choice for the customer who wished to consolidate their super into a single fund before the customers accepted the rollover service

14    As explained below, “financial product advice” within the meaning of the Act may be “personal advice” or “general advice”. An important element of Westpac’s case was its efforts to ensure that members of the “Super Activation Team” understood the difference between general and personal advice and did not provide personal advice. The evidence included a BT PowerPoint presentation dated January 2014 concerning the distinction between personal and general advice. A case study in the presentation included a response to the customer’s question whether the consultant would recommend a rollover of other funds into their BT account. The response given is:

As I am only qualified to provide general advice, I am unable to advise you as to whether you should consolidate all these funds into BT Super. This would require personal advice from a qualified financial advisor who would consider information such as:

whether you will have to pay any termination fees moving from existing funds

whether you will lose any insurance benefits

whether the fund you want to consolidate into has all the services you want

whether employer can contribute to your chosen fund

Would you like me to refer you to one of our financial advisors? If not, I can provide you with general advice regards the features and benefits of the BT Super Fund for you to consider.

15    The response is described as “Factual information” and explained as follows:

The consultant has reiterated the fact that they can only provide general advice and recognised that the client may be seeking personal advice and has offered to pass the client on to an adviser to obtain more specific advice.

16    ASIC argued that Westpac’s approach in the PowerPoint presentation reflected “orthodoxy” in relation to the distinction between general and personal advice, in contrast to the approach of the “Super Activation” team. ASIC’s case was that it was not legally significant that the alleged recommendations (or statements of opinion) were unsolicited and not in response to a customer’s request for advice.

Summary of conclusions

17    Except in the case of customer 3, the calls to the 15 customers involved the provision of “financial product advice” within the meaning of s 766B(1) of the Act. In particular, and contrary to Westpac’s case study above stating that a consultant qualified to provide only general advice was unable to advise customers as to whether they should consolidate their funds into the BT account, each caller impliedly made a recommendation to that effect.

18    Each recommendation was intended to influence the relevant customer in making a decision in relation to a particular financial product, being their respective BT accounts or their respective external accounts. ASIC has not demonstrated a relevant intention to influence customer 3.

19    In some cases, the calls also involved the provision of “statements of opinion” that were “financial product advice” within the meaning of s 766B(1), however, for each customer, the “recommendations” and “statements of opinion” were given in the same circumstances for the purposes of determining whether s 766B(3) applies. Accordingly, even if the “recommendations” and “statements of opinion” comprised separate pieces of “financial product advice”, there is no need to give separate consideration to whether the “statements of opinion” were “personal advice”.

20    The “financial product advice” was not “personal advice” within the meaning of s 766B(3)(a) of the Act because the callers did not consider one or more of the objectives, financial situation and needs of the customers to whom the advice was given.

21    Further, the “financial product advice” was not given in circumstances where a reasonable person might expect the provider of that advice to have considered the financial situation of the customer.

22    Accordingly, the “financial product advice” was not “personal advice” within the meaning of s 766B(3)(b).

23    It follows that ASIC has failed to demonstrate the alleged contraventions of s 912A(1)(b) of the Act, being that WSAL and BTFM breached the conditions of their respective AFSLs by providing personal financial product advice.

24    Similarly, ASIC has failed to demonstrate the alleged contraventions of s 946A and 961B of the Act, both of which depended upon proving that Westpac had provided “personal advice”.

25    By adopting the approach recorded in the QM Framework, Westpac provided “financial product advice” comprising the implied recommendation to accept the rollover service without explaining that a prudent customer may wish to consider matters of the kind that would be considered if the recommendation had been given as personal advice. The QM Framework also involved encouraging customers to accept the rollover service with the use of “social proofing” by which customers were told that their beliefs or reasons were commonly held. The fact that a customer’s belief or rationale was commonly held was not a matter that would have provided a basis for the recommendation, if it had been given as personal advice. The QM Framework approach was admittedly self-interested and did not necessarily promote the best interests of the customers but the approach did not draw the customers’ attention to either of those matters. Rather, it strongly conveyed the impression that Westpac was assisting the customer by its rollover service and, particularly by “social proofing”, the impression that customers should feel comfortable in accepting the service without giving consideration to their particular circumstances. In fact, as Westpac knew, there were matters (of the kind that would be considered if the “financial product advice” was given as “personal advice”) that, acceptance of the rollover service might have adverse consequences for the customer.

26    While not dishonest, in my view, the adoption and implementation of these aspects of the QM Framework approach failed to ensure that the “financial product advice”, being a financial service covered by Westpac’s AFSLs, was provided “efficiently, honestly and fairly” in contravention of s 912A(1)(a) of the Corporations Act 2001 (Cth).

Background facts

27    WSAL and BTFM are, and at all material times were, each holders of an “AFSL” granted under s 913B of the Act, and authorising them, as persons who carried on a financial services business in Australia within the meaning of s 911D, to provide financial services.

28    Under their respective AFSLs, WSAL and BTFM were authorised to provide “financial product advice”, including in relation to superannuation products, being “general advice” within the meaning of s 766B(4) of the Act. However, they were not authorised to provide financial product advice, including in relation to superannuation products, being “personal advice” within the meaning of s 766B(3) of the Act.

29    WSAL and BTFM are and were at all material times wholly-owned subsidiaries of Westpac Banking Corporation; members of the Westpac group of companies, which also includes BT Financial Group Pty Ltd (“BTFG”); and part of the BT Financial Group, being the wealth management division of the Westpac group of companies.

30    WSAL is the trustee of the Westpac MasterTrust – Superannuation Division (ABN 81 236 903 448) (“BT Business Account Fund”). BTFM is the trustee of the Retirement Wrap (ABN 39 827 542 991) (“BT Lifetime Account Fund”).

31    The BT Business Account Fund and BT Lifetime Account Fund are:

(1)    “regulated superannuation funds” for the purposes of s 19 of the Superannuation Industry (Supervision) Act 1993 (Cth) (“SIS Act”);

(2)    “regulated superannuation funds” within the meaning of s 10 of the SIS Act; and

(3)    “superannuation entities” within the meaning of s 10 of the SIS Act.

32    A membership in the BT Business Account Fund or BT Lifetime Account Fund is:

(1)    a beneficial interest in a superannuation entity;

(2)    a “superannuation interest” within the meaning of s 10 of the SIS Act; and

(3)    a “financial product” within the meaning of Ch 7, Div 3 of the Act, including by reason of s 764A(1)(g) of the Act.

33    WSAL is the issuer of a superannuation product, referred to as the BT Business Super account (“BT Business Account”). The BT Business Account forms part of the BT Business Account Fund.

34    BTFM is the issuer of a superannuation product, referred to as the BT Lifetime Super – Employer Plan Account (“BT Lifetime Account”). The BT Lifetime Account forms part of the BT Lifetime Account Fund.

35    In providing financial product advice, including in relation to superannuation products, WSAL and BTFM were persons providing financial services within the meaning of s 766A of the Act.

Westpac’s Super Activation Team

36    Westpac’s campaign to encourage rollovers into the BT funds involved a team of employees operated by one or more entities within the Westpac group and referred to at various times as the “Super Activation” or “Investor Solutions – Outbound” or “Investor Solutions” telephone unit (collectively, the “Super Activation Team”).

37    The parties agreed that, during the period 18 May 2013 to September 2016:

(1)    members of the Super Activation Team contacted and actually spoke with approximately 95,682 Westpac group customers;

(2)    approximately 31,506 customers were regarded by the Westpac group as having satisfied the following criteria:

(a)    during the call from the Super Activation Team, the customer stated they intended to:

(i)    roll over an external account into a superannuation account with the Westpac Group (“Westpac account”); or

(ii)    contribute additional funds into their Westpac account; and

(b)    funds were received into that customer’s Westpac account within 12 months of the customer’s statement of intention, noting that for “Corporate Superannuation customers”, funds over $1,000 were required to be received.

38    An amount of approximately $646,719,225.51 in FUM was generated during the period from 1 January 2013 to 16 September 2016 in respect of the customers who satisfied the criteria set out above.

39    BT accounts comprised some or all of the relevant Westpac accounts.

40    Super Activation Team members participated in the following campaigns that are the subject of this proceeding:

(1)    campaign titled “FY 14 02 Consolidation CAP FUP” which occurred between 2 April 2014 and 5 July 2014 (“Q2 campaign”); and

(2)    campaign titled “FY 14 04 Consolidation CAP FUP” which occurred between 1 October 2014 and 19 January 2015 (“Q4 campaign”).

41    The telephone calls that are the subject of this proceeding was made by six members of the Super Activation Team, referred to as Callers AA, BB, CC, DD, EE and FF.

42    The parties agreed that, at the time they made the telephone calls, the relevant Super Activation staff :

(1)    were employed by either Westpac or BTFG;

(2)    were acting as agents for BTFM when contacting members of the BT Lifetime Account;

(3)    were acting as agents for WSAL when contacting members of the BT Business Account;

(4)    were acting as agents for WSAL or BTFM and were engaging in conduct on behalf of either WSAL or BTFM as the case may be for the purposes of s 769B of the Act within the scope of their actual or apparent authority, such that:

(a)    the conduct of the relevant Super Activation staff is taken under s 769B(1) of the Act to be conduct by either WSAL or BTFM itself respectively; and

(b)    the state of mind of the relevant Super Activation staff is taken under s 769B(3) to be the state of mind of either WSAL or BTFM itself respectively;

(5)    were acting as representatives of either WSAL or BTFM respectively within the meaning of ss 910A and 960 of the Act; but

(6)    were at no stage authorised representatives of either WSAL or BTFM within the meaning of s 916A of the Act.

The “marketing aspect” of Westpac’s customer calls

43    Westpac claimed that “[n]o customer could have been under any illusion that Westpac was anything other than self-interested in offering” the rollover service. Westpac argued that it was engaging in a sales exercise to encourage customers to roll over their super into their BT account. It acknowledged that the purpose of the campaign was to increase FUM.

44    Westpac contended that the marketing aspect of its calls, which I understood to mean, Westpac’s aim of winning business by the calls, could not have been lost on the objective observer. Whatever might be the objective interpretation, there was no evidence as to the actual understanding of any of the 15 customers about Westpac’s aims or how Westpac would benefit from the rollovers. No doubt that understanding may have been affected by the context in which the customer received an unsolicited call.

45    The evidence did not establish an understanding by any customer that Westpac was self-interestedly marketing its own products in making the calls. Why should a customer have appreciated that? It is significant that the customers received an unsolicited call, expressed as an exercise in assisting the customer and not as an exercise in promoting Westpac’s self-interest. There were obvious benefits to customers accruing from a consolidation of a customer’s super accounts (although not necessarily from a consolidation into their BT account). Why would a customer not reasonably think that Westpac was seeking to build its relationship with the customer, by engaging in an exercise in which the interests of the customer and Westpac were aligned? As Westpac itself argued, the calls were intended to build its existing relationships with customers by providing a free service. As Mr John Cannons, initially employed by BTFG as a “Sales Coach” of consultants in the Super Activation Team and then as the manager of the team, and who gave evidence on behalf of Westpac, said: “It’s good to have a conversation with a customer”. Mr Cannons also said that part of the reason for asking the customers questions was to “make sure they’re happy with BT”.

46    As appears from the transcripts set out below, what could not have been lost on any customer was that Westpac was seeking to convey an aim of providing assistance to the customer. That message was conveyed by the friendly tone of the calls, references to the calls as a “courtesy”, expressions of a desire to “help” and requests to understand what was important to the customer.

47    While I accept that a customer receiving a call from Westpac would assume that Westpac was making the call self-interestedly, I also consider it quite likely that the customer would believe that Westpac was making the call in the customer’s interests. Importantly, in the context of an unexpected telephone call, the customer would not necessarily be on guard and alert to the possibility that Westpac might be seeking to obtain a benefit which (to Westpac’s knowledge) may have an adverse outcome for the customer.

Internal training on difference between general and personal advice.

48    ASIC noted that members of the Super Activation Team participated in “induction training”. This training included guidance about the difference between “general advice” and “personal advice”. ASIC submitted, and it was not substantially in dispute, that the training was to the effect of the PowerPoint presentation mentioned above. ASIC drew attention to the following statements included in the presentation:

a.    ‘NOTE: If you provide/suggest or imply an opinion/recommendation in relation to the factual information you present to a client, then you are providing advice’ (page 1);

b.    ‘The client needs to receive a general advice warning at the outset and at any time where you need to reinforce the nature of the engagement. However, be aware that providing a warning does not cover instances where you have provided personal advice (Implied or actual) to the client’ (page 2);

c.    ‘General advice should NEVER be provided in such a way as to drive a particular outcome. Doing so is unlikely to provide a balanced view of the options available to the client and could in fact constitute personal advice i.e. the client need has been taken into consideration in recommending the preferred outcome’ (page 2);

d.    ‘The client can volunteer personal information, yet the use of this information must be contained to what people generally consider. You should only use this information to provide more relevant general advice e.g. It is presented from what clients in a group or age bracket or life stage would generally consider’ (page 2);

e.    ‘When comparing products, you cannot state or imply that one of the products better meets the client’s objectives, financial situation or needs e.g. you cannot state or imply that specific product features will be suitable for the client’ (page 2);

f.    At ‘Case Study 6’, a case study about a staff member calling a customer about consolidation of their superannuation, there is a warning against making statements which involve ‘a recommendation to essentially rollover the clients existing superannuation funds’ and a warning against making statements which ‘attempted to influence the clients [sic] decision to invest further into

49    ASIC also referred to the case study mentioned at [14] above.

QM Framework and “social proofing”

50    ASIC contended that, notwithstanding Westpac’s internal training, Super Activation Team staff were also in fact trained and encouraged during the course of their employment to provide personal advice to customers. The basis for this contention was a document referred to as a “QM Framework” or “quality monitoring document”. ASIC argued that the QM Framework encouraged the Super Activation Team to provide advice to customers in a way which sought to use the client’s personal circumstances to drive an outcome of the customer rolling over their external superannuation accounts into their BT account.

51    The QM Framework was updated from time to time. ASIC referred to a version dated April 2014. Westpac did not suggest that it was unreasonable to accept that the relevant members of the Super Activation Team were instructed to follow this version of the QM Framework, or a document that was not materially different.

52    As Mr Cannons explained, the QM Framework was a document which set out risk compliance obligations for the Super Activation Team. It was first introduced to staff members during induction training and was used in a variety of ways to monitor the quality of calls and compliance. Mr Cannons’ evidence was that he coached callers to structure their calls based on the QM Framework.

53    What follows concerning the QM Framework was not substantially in dispute.

54    The QM Framework set out a four part structure for calls, under the following headings:

(1)    Open;

(2)    Gather;

(3)    Presenting; and

(4)    Objection Handling/Closing.

55    The “Open” phase was designed to put the customer in a positive, receptive frame of mind and to gain permission from the customer to ask them questions. For example, a staff member might introduce themselves and ask a question such as “So I can focus on what’s important to you, do you mind if I ask you a few questions?”

56    The “Gather” phase” involved asking the customer questions to “gather, uncover, clarify and develop” an understanding of the customer’s requirements. For example:

(1)    “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?” In the October 2013 version of the QM Framework, an equivalent question is framed: “A lot of customers that I speak to tell me that fees, investment options, online actions and insurance are important to them. Of these, which one of these is important to you?” According to the QM Framework, such questions were asked to “find out what’s important to the customer and draw the need and want to help you develop urgency to the close”. They were described as important to “‘help you present the features and benefits to the points of relevance to the customer. This will help you maintain rapport, ignite the thinking and emotions of the customer and uncover what will spur them to take action”.

(2)    “What do you see as the benefits of combining your super? Can you tell me a little bit more about that? Is (what the customer thinks the benefit of combining is) important to you?” In the October 2013 version of the QM Framework, an equivalent question is framed “When you said that you liked ... can you tell me a little more about that?” According to the QM Framework, such questions were asked to “find out more about the customer’s need and to build it through the use of questioning’. Such questions were said to be important to “encourage the customer to continue to talk to help you with your presentation & need what you are offering”.

(3)     “How much do you have in your super accounts?” How long have you been working for?” According to the QM Framework, this was important because the “information derived through this question is going to help you to prioritise your follow up according to value of consolidation, age and number of years the customer has been working”.

57    In the “Presenting” phase, the aim was to “conduct a persuasive, interactive presentation to the customer based on what the customer told you in your questioning”. This included:

(1)    “Social proofing” the customer with a statement such as “I understand where you are coming from & many customers are also in a similar situation”. According to the QM Framework, such a statement created a “space of comfort, assurance and confidence that other customers have had the same concerns and agreed to the same benefits”.

(2)    “Articulating the feature(s) as benefit(s)”. In the October 2013 version of the QM Framework, the equivalent description was written as “related the motivation/benefit back to what was picked up during the Gathering Requirements”. According to the QM Framework, this was done to “link the customer’s motivation to the features of the product / service that was found during your questioning”. It was said to be important “to create an emotional connection to how a service will benefit them rather than what the service provides”.

58    Mr Cannons gave evidence to the effect that “social proofing” is a sales and service technique, having the purpose of showing empathy to the customer and being intended to give the customer some comfort and assurance that they are in the same position as other customers. Mr Cannons agreed that, in this context, the purpose was to provide customers with a sense of assurance that their reasons for wanting to roll over are held by others, and that their aims are valid and reasonable.

59    Westpac submitted that the reference to experience of other customers underlined the fact that it was engaged in a marketing exercise and not an attempt to convey a judgment to the customer about what is in fact best for them. I do not agree. My reaction to the “social proofing” aspects of the calls was that they were incongruous: as a recipient of an unsolicited call from Westpac, why would I be interested in the opinions of other customers? It is probably reasonable to assume that “social proofing” is used because some customers are influenced by that technique. However, another likely interpretation of “social proofing” is that the caller was simply attempting to build rapport or to make conversation for some other reason.

60    Finally, the “Objection Handling/Closing” phase was aimed at overcoming any objections raised by the customer and seeking a “commitment for action that moves the customer closer to the sale”. This phase included:

(1)    Using all relevant information to overcome any customer objection. This included trying to “find out any underlying reasons that could hold the customer back from following the next steps”. The Super Activation staff member was to be scored “zero points” if they “accepted the customer’s objection without questioning further or using a strategy to overcome it”. In the October 2013 QM Framework, staff were to overcome the customer’s objection using “the important points taken from the call to create the connection between their needs and wants and their objections”.

(2)    Providing “clearly articulated next steps” to “provide direction to the customer to ensure the end outcome is achieved”.

(3)    “Effectively end[ing] the call with a powerful benefit based on the customers motivation / interest”, by “link[ing] the customer’s motivation using a relevant benefit after you demonstrate your advance”. This was said to be important because it will “help you build urgency for the service. Providing this linking statement at the end of the call can help leave a lasting need in the customer’s mind”.

61    As part of their ongoing training, the calls of the staff were reviewed by a “sales coach” and scored in accordance with a scoring system set out in the QM Framework. The staff attended one-on-one meetings with their “sales coach” approximately once per week to assess how closely they were following the QM Framework and how they might more closely follow its requirements.

62    ASIC noted that the QM Framework set out specific techniques for which staff were scored, including questioning techniques designed “to maintain rapport, to gather the right information, and to build desire in the customer”. For example, staff received points for:

(1)    Using “open questions” such as “what’s important to you?”. These were said to be important because they would:

“obtain uninfluenced responses to allow you to begin to understand what’s important to the customer and help you through the sales process. Open questions are the key to unlocking every customer’s unique requirements. Aim to uncover their problems or needs so when you present, they will pay more attention”.

(2)    Using “leading” questions such as “What benefits do you see in combining your super?” These were asked because “[o]nce you’ve gathered bits of information derived from the open questions, the use of leading questions will narrow down to your customer’s need”. These were said to be important because they were “[g]ood for leading the customer in the direction you want them to go and finding out more specific information about their requirements”.

63    Westpac noted that a call would be classified as an “autofail” in circumstances which included where an operator:

(1)    did not 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;

(2)    failed the “personal advice” prohibitions;

(3)    did not refer a customer to appropriate advice channels if the customer asked certain questions; or

(4)    exerted undue pressure or influence on the customer.

64    When the relevant calls were made, members of the Super Activation Team were eligible for bonus payments. Approximately 15% of such payments were calculated by reference to scores that their calls were given under the QM Framework. Approximately 30% of any such bonus payment was calculated by reference to the FUM which the relevant staff member generated for Westpac on their calls. On the other hand, staff became ineligible for bonuses if they had a specified number of compliance “fails”.

65    In final submissions, ASIC sought several findings of fact, which generally did not appear to me to be controversial and I make them to the following extent:

(1)    Westpac had the QM Framework in place over an extended period and used it on campaigns that were aimed at encouraging customers to roll over their superannuation. The QM Framework was updated from time to time to take into account feedback from consultants, managers and coaching staff.

(2)    Staff in the Super Activation Team were trained and encouraged by coaches to follow the QM Framework.

(3)    Staff were marked and assessed based on the QM Framework and a substantial part of how their performance and any bonus was assessed was their ability to follow the QM Framework and their ability to generate FUM.

(4)    The calls to the 15 customers reflected the terms of the QM Framework to varying extents, including through opening by saying that they were calling about the relevant customer’s superannuation, as a “courtesy call” or to “help them potentially save on fees”, uncovering the personal motivations of the customer and then linking those motivations to influence the customer to roll over their external superannuation accounts into the customer’s BT account. The callers were encouraged to, and typically did, seek information about the customer’s personal circumstances.

(5)    Based on the transcripts of the various calls, some callers attempted to personalise the calls, listen to the customers and encourage the belief that they were being listened to and that their reasons for rolling over funds into their’ BT account were valid and reasonable. The callers attempted to use the information provided by the customers to inform what they said subsequently.

(6)    Based on the transcript of the various calls, staff apparently considered that they could seek to influence customers to roll over funds into their BT account by saying words to the effect that they “would potentially save on fees”.

(7)    There is no reason to think that any of the callers knew whether it was in the best interests of the customers to roll over their external accounts into the customer’s BT account.

66    Having made these findings, I do not generally consider it necessary to make findings by reference to ASIC’s lengthy “Evidence Table”. My factual findings concerning whether callers “considered” the objectives, financial situation and needs of customers are set out below.

67    ASIC contended that the evidence supported a finding that the Super Activation Team adopted their approach to calls regardless of whether or not it was beneficial to the customer, because they did not know whether or not it was in the interests of customers to roll over their external accounts. I do not accept that this is a fair reflection of the QM Framework, which encapsulated the team’s approach. As ASIC’s “Moneywise” website noted, consolidation of superannuation accounts is beneficial, at least to the extent that it reduces paperwork and makes it easier for the customer to keep track of the customer’s super. According to ASIC, there is also a financial benefit, namely, saving costs by paying only one set of fees. Thus, in my view, it is fair to say that the Super Activation Team did know that it was in the interests of customer to roll over their external accounts into a single account, although they did not know whether it was in their best interests to roll over the accounts into a BT account.

Legal framework

Relevant statutory provisions

68    Chapter 7 of the Act is entitled “Financial services and markets”. Section 760A sets out the main object of Chapter 7 as follows:

The main object of this Chapter is to promote:

(a)    confident and informed decision making by consumers of financial products and services while facilitating efficiency, flexibility and innovation in the provision of those products and services; and

(b)    fairness, honesty and professionalism by those who provide financial services; and

 (c)    fair, orderly and transparent markets for financial products; and

(d)    the reduction of systemic risk and the provision of fair and effective services by clearing and settlement facilities.

69    Part 7.1 of Ch 7 contains definitions of key concepts and commonly occurring expressions in Ch 7. Division 3 of Pt 7.1 is entitled “What is a financial product?” As noted earlier, it is not in dispute that membership in the BT Business Account Fund or BT Lifetime Account Fund is a “financial product” within the meaning of the relevant statutory provisions.

70    Division 4 of Pt 7.1 is entitled “When does a person provide a financial service?” As it stood at the relevant time, Div 4 contained five provisions, headed as follows:

766A    When does a person provide a financial service?

766B    Meaning of financial product advice

766C     Meaning of dealing

766D    Meaning of makes a market for a financial product

766E    Meaning of provide a custodial or depository service

71    By s 766A(1)(a), for the purposes of Chapter 7, and subject to s 766A(2)(a), a person provides a “financial service” if they provide “financial product advice”.

72    Section 766B provides:

Meaning of financial product advice

(1)    For the purposes of this Chapter, financial product advice means a recommendation or a statement of opinion, or a report of either of those things, that:

(a)    is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products; or

(b)    could reasonably be regarded as being intended to have such an influence.

(1A)    However, subject to subsection (1B), the provision or giving of an exempt document or statement does not constitute the provision of financial product advice.

(1B)    Subsection (1A) does not apply for the purpose of determining whether a recommendation or statement of opinion made by an outside expert, or a report of such a recommendation or statement of opinion, that is included in an exempt document or statement is financial product advice provided by the outside expert.

(2)    There are 2 types of financial product advice: personal advice and general advice.

(3)    For the purposes of this Chapter, personal advice is financial product advice that is given or directed to a person (including by electronic means) in circumstances where:

(a)    the provider of the advice has considered one or more of the person’s objectives, financial situation and needs (otherwise than for the purposes of compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 or with regulations, or AML/CTF Rules, under that Act); or

(b)    a reasonable person might expect the provider to have considered one or more of those matters.

(4)    For the purposes of this Chapter, general advice is financial product advice that is not personal advice.

73    As noted earlier, under their respective AFSLs, WSAL and BTFM were permitted to provide financial product advice that was “general advice” but not “personal advice”.

74    Part 7.6 of Ch 7 is entitled “Licensing of providers of financial services”. Division 3 of Pt 7.6 is entitled “Obligations of financial services licensees”. Division 3 sets out a series of “baseline” or minimum obligations on all holders of an AFSL – whether providing “financial product advice” or otherwise.

75    By s 912A(1), a financial services licences must:

(a)    do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; and

…

(b)    comply with the conditions on the licence; and

(c)    comply with the financial services laws; and

76    Part 7.7 of Ch 7 is entitled “Financial services disclosure”. Part 7.7 Div 2 is entitled “Person provided with financial service as retail client to be given a Financial Services Guide”. In respect of both the providers of “general advice” and ‘‘personal advice’’, Pt 7.7, Div 2 imposes a minimum disclosure obligation on providers in circumstances where financial services are being provided to “retail clients” (as defined in s 761G).

77    In respect of the providers of ‘‘personal advice” to retail clients (see s 944A), Pt 7.7, Div 3 imposes a number of additional obligations. In particular, by s 946A, the provider has an additional obligation of disclosure: to provide the client with a “Statement of Advice” which satisfies the requirements of Sub-Divs C and D of Pt 7.7, Div 3. These Sub-Divs impose a number of prescriptive requirements regarding what that advice must contain, including by s 947B:

(1)    information about the basis on which the advice is or was given;

(2)    information about any remuneration (including commission) or other benefits the providing entity or an employee of the providing entity is to receive that might reasonably be expected to be or have been capable of influencing the providing entity in providing the advice; and

(3)    information about: (i) any other interests, whether pecuniary or not and whether direct or indirect, of the providing entity or of any associate of the providing entity; and (ii) any associations or relationships between the providing entity or any associate of the providing entity and the issuers of any financial products; that might reasonably be expected to be or have been capable of influencing the providing entity in providing the advice.

78    In relation to the provision of “general advice”, s 949A requires the provider to:

… warn the client that [inter alia]:

(a)    the advice has been prepared without taking account of the client’s objectives, financial situation or needs; and

(b)    because of that, the client should, before acting on the advice, consider the appropriateness of the advice, having regard to the client’s objectives, financial situation and needs …

79    Further, in relation to the provision of “personal advice” to a person as a retail client:

(1)    by s 961B(1), the provider must act in the best interests of the client;

(2)    by s 961G, the provider may only provide the advice to the client if it would be reasonable to conclude that the advice is appropriate to the client, had the provider satisfied that duty under s 961B; and

(3)    by s 961J, in the case of a conflict, the provider must give priority to the client’s interests when giving the advice.

Principles of statutory interpretation

80    Key principles of statutory construction identified by the parties as applicable in this case are that:

(1)    words in a statute must be considered in context, which context includes legislative history and extrinsic materials, but such materials cannot displace the clear meaning of the text: Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; (2012) 250 CLR 503, 519 at [39];

(2)    the construction of the text arrived at should have both internal logical consistency, and involve an overall harmonious interpretation: Independent Commission Against Corruption v Cunneen [2015] HCA 14; (2015) 256 CLR 1, 20-21 at [31] citing Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355, 381-382 at [69]-[70];

(3)    while the task of statutory construction must begin with a consideration of the text itself, the meaning of the text may require consideration of the context, which includes the general purpose and policy of a provision and the mischief it is seeking to remedy: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 at [47]; and

(4)    the Court will also have regard to the consequences of a particular interpretation, and will prefer a construction that will avoid consequences which appear irrational or unjust: Legal Services Board v Gillespie-Jones [2013] HCA 35; (2013) 249 CLR 493 at [48]; Public Transport Commission (NSW) v J Murray- More (NSW) Pty Ltd [1975] HCA 28; (1975) 132 CLR 336 at 350.

General observations

81    As ASIC contended, the definition of personal advice in s 766B(3) is fundamental to the legislative scheme regulating financial advice, as it demarcates the important boundary between “personal advice” and “general advice”: the former requires advice appropriate to the client and stricter obligations of disclosure and disinterestedness.

82    Both “general advice” and “personal advice” are types of ‘‘financial product advice”. Under s 766B(l), both types of advice are permitted to be subjectively or objectively intended to influence a person or persons in making a decision about, relevantly, “a particular financial product”. The fundamental distinction between the two types of advice is that personal advice is given or directed to a person “in circumstances where” the provider “has considered one or more of the person’s objectives, financial situation or needs”, or “a reasonable person might expect the provider to have considered one or more of those matters”. It is the subjective or objective consideration of the individual’s personal circumstances that distinguishes the two types of advice.

Section 766B(1): “Recommendation or a statement of opinion”

83    The terms “recommendation” and “statement of opinion” in s 766B(1) have been interpreted broadly, and include an implicit recommendation or statement of opinion: Australian Securities and Investments Commission (ASIC) v Park Trent Properties Group Pty Ltd (No 3) [2015] NSWSC 1527 (“Park Trent”) at [364]-[366].

84    In Park Trent, noting that dictionary definitions do not control the construction of a statutory provision, Sackville AJA set out the following at [364]:

The dictionary definition of “recommendation” includes “anything that serves to recommend a person or thing or induce acceptance or favour”. The definitions of “recommend” include:

1.    to commend by favourable representations; present as worthy of confidence, acceptance, use etc.

2.    to represent or urge as advisable or expedient.

The dictionary definition of “opinion” includes:

1.    judgment or belief resting on grounds insufficient to produce certainty.

…

3.    the expression of a personal view, estimation or judgment.

85    As to implied recommendations and statements of opinion, his Honour continued at [365]:

The construction of s 766B(l) must take into account that the language encompasses a recommendation or statement of opinion that is intended to influence a person in making a decision relating to a financial product or could reasonably be regarded as having such an influence. A person wishing to influence another person (the client) to make a decision relating to a financial product ... may do so in ways other than by express recommendations or explicit statements of opinion. Information or other material may be presented to the client in a form implying that the presenter favours or recommends a particular course of action without saying so explicitly. Similarly information or other material may be presented in a form that implies that the presenter’s view is that the contemplated course of action is likely to be beneficial to the client. The authorities have accepted that the statutory language should be given a broad interpretation. Specifically, they support the proposition that a person may provide information or present material in a way that implicitly makes a recommendation or states an opinion in relation to a financial product.

86    Sackville AJA found (at [370]-[389]) that in the course of its interactions with investors the company made statements recommending, both explicitly and implicitly, that investors invest in property using a self-managed superannuation fund. His Honour further found that statements of opinion were made that investing in properties through a self-managed superannuation fund was a sound investment strategy likely to produce strong returns in the medium to long term that the attendees at certain seminars should favourably consider establishing one.

87    Westpac contended that Trent Park is distinguishable from the present case because the bespoke analysis provided to individual investors in the former plainly represented an expression of opinion that the investment was appropriate for them.

88    In Australian Securities and Investments Commission v Stone Assets Management Pty Ltd [2012] FCA 630; (2012) 205 FCR 90, Besanko J found that an online trading platform known as MetaTrader 4 provided trading analysis information, which could be construed as an expression of opinion that trading in a certain way, namely a way that makes use of the “trading indicators” made accessible by the platform (such as market trend, strength and volatility information), was likely to be profitable.

89    In Australian Securities and Investments Commission v Oxford Investments (Tasmania) Pty Ltd [2008] FCA 980; (2008) 169 FCR 522 (“Oxford Investments”), Heerey J found that the defendants made implied recommendations or statements of opinion that were intended to influence persons attending courses of instruction in making a decision in relation to share price index futures. The relevant statements “necessarily implied that [the defendants] held the opinion that application of the Methodology would enable the user to trade profitably” ([17]).

90    In Australian Securities and Investments Commission v Sydney Investment House Equities Pty Ltd [2008] NSWSC 1224; (2008) 69 ACSR 1 (“Sydney Investment House Equities”), Hamilton J noted at [358] that, while there were no decisions directly on point as to what could be characterised as a recommendation or a statement of opinion, there were decisions that “endorse the taking of practical and substantive approach to legislative provisions of this type”.

91    At [359], Hamilton J found that the offer of a high (18%) interest rate (“we can give you an 18% interest rate”) and promise of a mortgage (“we can arrange a mortgage that will allow you to invest with us”) were enough to convey a recommendation to the addressee that the investment was advantageous. This finding was made in relation to the defendants’ property investment scheme, whereby investors were invited to make loans to two of the defendants of monies to be lent to property developers (which, as it turned out, were insolvent related entities).

92    Westpac argued that the reasoning in this case must be incorrect because it seems to suggest that drawing attention to any advantageous feature of a financial product would amount to conveying a recommendation for the purposes of the statute. They noted that the relevant defendant (an individual who controlled the companies concerned) was unrepresented and the judgment does not indicate that he offered a substantive response to ASIC’s contentions on this issue: see [344].

93    Applying Sackville AJA’s interpretation, the terms “recommendation” and “statement of opinion” are to be given a broad interpretation, consistent with their ordinary meaning. The legislature has singled out “recommendations” and “statements of opinion” (and reports of either those things) as the conduct that constitutes “financial product advice”, where the conduct satisfies one of the two limbs of s 766B(1). Thus, for any particular statement that satisfies one of those two limbs, that statement will not constitute “financial product advice” unless it is also, relevantly, a “recommendation” or a “statement of opinion”.

94    In this context, in my view, the expression “statement of opinion” is intended to exclude statements of fact from the meaning of “financial product advice”. This construction is consistent with the legislative scheme which is designed to enable confident and informed decision making, and to impose obligations on AFSL holders in relation to the provision of “financial product advice”. As a general proposition, it might be thought that consumers need to understand why a recommendation is made, or an opinion is expressed, but not why a statement of fact is articulated: the explanation for the latter is the existence of the fact itself. Thus, there is an obligation to give a “Statement of Advice” where personal advice is provided to a person as a retail client under Pt 7.7 Div 3. By s 946A(2), the Statement of Advice may be the means by which the advice is provided, or a separate record of the advice. By s 947B(2)(b), a Statement of Advice must include information about the basis on which the advice is or was given.

95    However, as the law of evidence reveals, the distinction between fact and opinion is not always obvious: see, for example, La Trobe Capital & Mortgage Corporation Limited v Hay Property Consultants Pty Ltd [2011] FCAFC 4; (2011) 190 FCR 299 at [43] and [44]. In that context, an opinion is commonly taken to mean “an inference from observed and communicable data”: Lithgow City Council v Jackson [2011] HCA 36; (2011) 244 CLR 352 (“Lithgow City Council”) at [10], citing Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 5) (1996) 64 FCR 73 at 75. As explained in Dyson Heydon’s Cross on Evidence, 10th ed, at [2001], the origins of rules concerning opinion evidence reflect a concern that opinion had an uncertain or unreliable basis.

96    In Lithgow City Council, the High Court considered the nature of a statement made by ambulance officers. The appellant sought to distinguish between an opinion and a statement which merely raised a question, arguing that the relevant representation did no more than raise a question as to a fact (that the respondent had fallen 1.5 metres onto concrete), or speculate whether this was the fact, or raise as a possibility that fact. In dealing with a contention that the relevant representation was an inference from observed and communicable data (and therefore an opinion), French CJ, Heydon and Bell JJ (Gummow and Crennan JJ agreeing) noted the range of possible bases for a representation, as follows (at [28]):

What the ambulance officers did observe and could have observed could have caused them to draw an inference from the observations. But the present question is whether they actually did do so, not whether they could have. The question turns on the form of what they said in the context in which they were speaking. That is because what it means to raise a query about something can vary with the context. “I query whether that is so” can mean “That is probably so, though I am not sure” or “That may well be so, though I am not sure”. But it can also mean: “I raise a question about whether it is so”, or “I speculate whether it is so”, or “I raise the possibility that it is not so”, or “I doubt that that is so”. It can even mean “I deny that that is so”.    

97    At [37] and [38], the High Court rejected a finding of the Court of Appeal of the Supreme Court of New South Wales that the relevant statement was “an opinion, in the sense of an inference drawn, that there was a question” whether the respondent had fallen 1.5 metres onto concrete. Their Honours also rejected the appellant’s submission that to characterise the impugned representation as an opinion that there was a question whether there had been a 1.5 metre fall was to render it inadmissible, saying (at [38]):

The ambulance officers’ records are so shrouded in obscurity about what data they observed and suggest so great an unlikelihood that that data could support, or were seen as pointing to, any definitive inference that it is not possible to find on the balance of probabilities what the impugned representation was stating. It is therefore not possible positively to find that it stated an opinion.

98    In the context of s 766B(1), a “practical and substantive” approach would support an interpretation of the words “statement of opinion” to exclude statements of fact, being statements that are not based upon inference, and statements that do not involve any definitive inference (such as speculation). A statement of possibility may be made on the basis of inference and may therefore be a “statement of opinion”. It may be necessary to understand surrounding context to determine whether a statement is the product of inference so as to be a “statement of opinion” within the meaning of s 766B(1).

99    For example, the bare statement “If you buy this product, you could be better off” may be the expression of an inference based on a fact or facts about the consumer’s financial position (or other facts), or it may be based on nothing more than the logic that purchase of the product may or may not lead to the consumer being better off. In my view, where there is no evidence that the statement is an inference based on other facts, there is no basis for a conclusion that the statement is a “statement of opinion”.

100    It is not necessary for me to determine whether the findings in Sydney Investment House Equities were wrong: the issue in this case is whether various statements made by the callers were recommendations or statements of opinion, or implied recommendations or statements of opinion.

101    Westpac accepted, and I agree, that an implicit statement that the provider favours or commends a particular course of action without saying so in terms, or that the provider’s view is that the contemplated course of action is likely to be beneficial to the client, is capable of amounting to “financial product advice”. A recommendation or a statement of opinion may be made implicitly where information or other material is presented in a form that implies that the presenter’s view is that the contemplated course of action is likely to be beneficial to the client.

102    Westpac argued that a recommendation or statement of opinion could not comprise “any … sales message or expression of enthusiasm…in an interaction with a customer”. I do not agree. The character of words as “sales message” or “expression of enthusiasm” does not answer whether those words are a “recommendation” or a “statement of opinion”: it is necessary to consider the content of the words to determine whether a recommendation or statement of opinion is made.

103    As ASIC observed, it was the overlap between the concept of sales and advice that was one of the key concerns addressed by the Parliamentary Joint Committee on Corporations and Financial Services in its November 2009 Report – the precursor to the Corporations Amendment (Further Future of Financial Advice Measures) Act 2012 (Cth). The Committee noted a key focus as being the “sales-advice conflict” and “the effect of sales imperatives on the quality of financial advice” in the financial sector (at [5.1]).

104    The defendants submitted that the reference to a “report” in s 766B(1) suggests a degree of formality, and is consistent with the natural sense of the terms “recommendation” and “statement of opinion” as involving advice as such. They argued that, taken together, these terms import some application of estimation and judgment. The same point was said to emerge from the use of the word “advice” in the defined term “financial product advice”, bearing in mind that the ordinary English meaning of a word defined in a statute may properly influence the interpretation of the definition: Rennie Golledge Pty Ltd v Ballard [2012] NSWCA 376; (2012) 82 NSWLR 231 at [129].

105    I do not accept that the use of the words “report” and “advice” operate to limit the meaning of the terms “recommendation” and “statement of opinion” in s 766B(1), as I have described them above. Rather, the reference to a “report” is expressed in the alternative and appears to be intended to extend the scope of the section beyond a case of a “recommendation” or “statement of opinion”. The construction I have identified corresponds with the ordinary English meaning of “advice”.

Section 766B(1): “Intended to influence a person in making a decision in relation to a particular financial product”

106    To satisfy s 766B(1)(a), the relevant recommendation or statement of opinion must be “intended to influence a person or persons in making a decision in relation to a particular financial product …”.

107    This element requires the identification of:

(1)    a person or persons who are intended to be influenced;

(2)    a decision that is or may be under consideration by the person; and

(3)    a particular financial product to which the decision relates.

108    In this case, a recommendation or statement of opinion intended to influence a customer in making a decision to rollover external accounts into a BT account would satisfy the requirements of s 766B(1)(a).

Section 766B(3): Financial product advice given “in circumstances where”…

109    I accept ASIC’s contention that, for s 766B(3)(a), the phrase “in circumstances where” does not require a causative nexus or connection between the advice provided and the personal circumstances considered, or that the advice be provided on the basis of the particular personal circumstances of the person. Rather, it directs attention broadly to the circumstances in which the financial product advice was given.

110    Thus, I accept, a provider of advice cannot avoid the application of the section by alleging that they would have provided the same recommendation regardless of the person’s personal circumstances.

Section 766B(3): “Provider of 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”

A person’s objectives, financial situation and needs

111    The terms “objectives, financial situation and needs” are not defined in the Act. ASIC pointed to the following definitions in the Macquarie Dictionary:

(1)    “objective”: “an end towards which efforts are directed; something aimed at”;

(2)    “situation”: “the state of affairs; combination of circumstances”; and

(3)    “needs”: “a case or instance in which some necessity or want exists”.

112    On ASIC’s interpretation, the use of the word “and” requires that the phrase “the person’s objectives, financial situation and needs” be considered together. Seen this way, the necessary result is that the term “one or more of” refers to the whole phrase. Accordingly, ASIC argued that the provision ought to be read as referring to one or more of a person’s objectives; one or more aspects of the person’s financial situation or one or more of the person’s needs.

113    ASIC contended that the words “one or more” were added to s 766B(3) to make it clear that the provision was not limited to a context where a provider has a considered a range of the person’s objectives, financial situation and needs or represented to a customer that they had considered a range of the person’s objectives, financial situation and needs. It is sufficient that only one objective, aspect of a financial situation or need be considered or could be expected to have been considered. In support of that contention, ASIC referred to a Supplementary Explanatory Memorandum to the Financial Services Reform Bill 2011 (Cth), which stated relevantly:

[3.20]    As currently drafted, proposed subsection 766B(3) defines personal advice as financial product advice that is given or directed to a person in circumstances where the provider has considered the ‘objectives, financial situation and needs’ of the person (or where a reasonable person might expect the provider to have considered these matters).

[3.21]    Item 19 amends proposed subsection 766B(3) to define personal advice as advice given or directed to a person where the provider has considered one or more of the person’s objectives, financial situation and needs (or where a reasonable person might expect the provider to have considered one or more of these matters).

[3.22]    The purpose of this proposed amendment is to ensure that a financial services provider will be subject to the requirements of proposed Divisions 3 or 5 of Part 7.7 (including the requirement to provide a SOA) when advising a retail client that a particular financial product (or class of financial products) is appropriate to them as an individual.

[3.23]    As subsection 766B(3) is currently drafted, a financial services provider could recommend a financial product or class of financial product as being appropriate to a retail client’s individual needs and objectives, but avoid the requirements of proposed Divisions 3 or 5 of Part 7.7 because they had not considered the client’s financial situation.

114    ASIC suggested that, if its construction were not correct, then a provider could almost always be able to evade personal advice obligations by not considering the whole of a person’s objectives, needs or financial situation before providing advice and even by telling the customer (somewhat ambiguously) that they were not considering the whole of that customer’s objectives, needs or financial situation.

115    ASIC also drew attention to s 961B(2)(b)(ii), by which the provider may satisfy the duty to act in the best interests of the client in relation to the provision of personal advice by identifying, relevantly, “the objectives, financial situation and needs of the client that would reasonably be considered as relevant to advice sought on that subject matter”. By this provision, ASIC argued, the legislature had contemplated that advice may be “scaled”, or not directed to the whole of the financial circumstances of a client. ASIC referred to the Replacement Explanatory Memorandum to the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 (Cth) which stated as follows (at [1.34]):

This process is designed to accommodate the provision of limited advice (also referred to as ‘scaled advice’) that only looks at a specific issue (for example, single issue advice on retirement planning) and ‘holistic’ advice that looks at all the financial circumstances of the client. In some situations, the client might prefer to receive more targeted advice on a matter that is particularly concerning them rather than comprehensive advice. As long as the provider acts reasonably in this process and bases the decision to narrow the subject matter of the advice on the interests of the client, the provider will not be in breach of their obligation to act in the client’s best interests. The scaling of advice by the provider must itself be in the client’s best interests, especially since the client’s instructions may at times be unclear or not appropriate for his or her circumstances.

116    For its part, Westpac argued that ASIC’s construction was inconsistent with the language of the section and the explanatory materials and was “unworkable”. It pointed out that the words “one or more” could not be applied distributively to the category of “financial situation”. That is, it is a nonsense to speak of “one or more of a person’s financial situation”. Thus, it is one or more of the three categories of objectives, financial situation and needs that must be considered and this construction is consistent with the language of the explanatory memorandum extracted above.

117    Westpac argued that this construction gives the provision a workable and sensible operation and is consistent with the statutory scheme and, in particular, the mandatory content of the Statement of Advice required by ss 944A and 946A when “personal advice” is given. The argument was that it makes sense to impose the s 947B mandatory content where the client would reasonably expect the provider to have taken into account the whole of the client’s objectives, or financial situation, or needs, in giving financial product advice. In that situation, the client would be entitled to expect that the provider was acting in the client’s best interests (as the statute requires by s 961B) and the s 947B context permits the client to make an informed decision about whether the advice is truly in the client’s best interests. Conversely, Westpac contended, it makes no sense to impose that requirement where a customer would reasonably understand that a financial institution was self-interestedly marketing its own products and there was no reason to think any recommendations were made on the basis that they were appropriate to the customer’s personal situation as a whole.

118    In my view, particularly having regard to the language of s 961B(2)(b), this phrase has the meaning contended for by ASIC. It is not necessary to apply the words “one or more” distributively, as proposed by Westpac. Rather, the phrase “the person’s objectives, financial situation and needs” refers to be considered together.

119    On ASIC’s interpretation, the use of the word “and” requires that the phrase “the person’s objectives, financial situation and needs” refers to the multiplicity of objectives, financial situations and needs of a client that may be relevant to personal advice provided to that client. As s 961B(2)(b)(ii) contemplates, a person’s “financial situation” may comprise something less than the totality of their financial situation.

120    I also accept that the concepts of “objectives”, “financial situation” and “needs” are not mutually exclusive and may contain significant overlap. For example, a customer with a dependent disabled child may characterise the goal of accumulating sufficient wealth to provide for that child as both an objective and a need. Further, the dependence of the child on the customer may form part of the customer’s “financial situation”.

121    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.

122    Whether a person has “needs” may extend beyond an obvious necessity that could be identified by someone apart from the person themselves, to include an urgent want identified by the relevant person (where minds might reasonably differ as to whether the urgent want is properly characterised as a “need”). In this case, ASIC identified the alleged “needs” as matters identified by the customers themselves, either expressly or by implication. An example is the alleged “need to save on fees”, which is not an obvious necessity in the absence of other facts. Customers 2 and 12 expressed a need to consolidate their super. I would not accept that this was a need within the meaning of s 766B(3) without more evidence as to the basis of the asserted need.

Subjective limb (a): Provider of advice has “considered” relevant matters

123    The term “consider” is not defined in the Act. ASIC submitted that it should be given a broad interpretation and referred to the following Macquarie Dictionary definitions: “to think; suppose”; “to make allowance for”; “to pay attention to; regard”; “to view attentively, or scrutinise”. ASIC contended that there is no further requirement that a provider has given detailed, extensive or careful consideration to any of the personal circumstances in question.

124    Senior counsel for ASIC, Dr Renwick SC, argued against a narrow interpretation of the word “considered” that would permit unscrupulous advisers to evade the operation of the scheme by failing to consider the objectives, needs or financial situation of their clients.

125    ASIC accepted that the “mere mention” by one of Westpac’s callers of one or more of a customer’s objectives, financial situation and needs, or the fact that an aspect of a customer’s financial affairs is “noticed” by the caller, would not be sufficient to show that such matters had been “considered”. Nor would it be sufficient to show that a caller had learned some personal detail concerning the customer.

126    ASIC also noted that what amounts to consideration is a question of fact. ASIC contended that, if advice was given “in light of any personal objectives, financial situation or needs identified by the recipient”, that would be sufficient to meet the requirement of consideration of one of those matters. ASIC appeared to accept that the meaning of “considered” involves an evaluation of relevant subject matter, arguing that the social proofing technique is “inherently evaluative” because the customer states what is important to them and the caller responds with encouragement which “purports to consider what customers have told BT generally and distil them into the main reasons” for action by other customers.

127    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. If it were suggested, I do not accept that such an interpretation will permit unscrupulous advisers to evade the scheme by failing to give the client’s personal circumstances due consideration: in my view, s 766B(3)(b) is intended to capture those cases.

128    I do not accept that the social proofing technique necessarily involved, or was likely to involve, consideration of information obtained from the customer. First, it occurred in the context of a telephone conversation and involves an immediate reaction to the information obtained so that the opportunity for consideration or reflection is negligible. Secondly, as appears from the conversations the subject of this proceeding, the social proofing involved affirming the customer’s stated reasons for wishing to consolidate their super funds by asserting that their reasons were held in common with others. I do not accept that identifying a commonality between stated reasons and reasons held by others involves evaluation of the customer’s stated reasons: it merely involves a recognition of the nature of those reasons.

Objective limb (b): What a reasonable person might expect a provider of advice to have considered

129    ASIC accepted that the words “might expect” in s 766B(3)(b) are constrained by notions of reasonableness – a situation where only an unreasonable person might expect the provider to have considered the relevant matters will not fall within the definition of “personal advice”.

130    The word “might” can be used to refer to a situation contrary to the fact: in this case, it may signify a situation in which a reasonable person would expect a provider of advice to have considered a relevant matter, contrary to the fact.

131    In some contexts, the word “might” is used to convey a possibility. ASIC submitted that the word connotes a situation where the reasonable person considers that it is possible that the provider has considered a relevant matter. This interpretation is in tension with the stipulation of a test limited by reference to the position of a “reasonable” person (as opposed to any customer) and also limited by reference to what that person might “expect”, that is, what that person might regard as likely to happen. There is no obvious reason why the legislation should be construed to cover possibilities that could be contemplated by a reasonable person.

Who is a reasonable person?

132    ASIC submitted that, particularly given the focus of the legislation on the protection of retail clients, the “reasonable person” should be understood as an ordinary member of the community with some but not any particular knowledge as to what superannuation is and some knowledge of the objective circumstances in which the advice is given.

133    ASIC suggested that the standard here should be that of the ordinary person who is not necessarily a university graduate nor has a background in the financial world or indeed any specialised knowledge of superannuation products. In support of this proposition, ASIC referred to Young J’s contemporised antipodean adaption in Harkness v Commonwealth Bank of Australia Ltd (1993) 32 NSWLR 543 at 545-546 of the classic “man on the Clapham omnibus” standard, namely “the person on the Bondi bus”, itself adopted in the context of s 588FG(b)(ii) of the Act in Cussen v Federal Commissioner of Taxation [2004] NSWCA 383; (2004) 51 ACSR 530 at [17], [31].

134    Westpac contended that the reasonable person’s knowledge of the objective circumstances in which advice is given could not extend to matters extraneous to the interactions between the provider of the advice and the customer and which are not known to the customer at all. Thus, it contended that the reasonable person is a hypothetical person standing in the actual customer’s shoes.

135    This submission is directed to the identified relevant “circumstances” in s 766B(3). I do not accept that the relevant circumstances are only those that could have been known by a reasonable person. In my view, s 766B(3) directs attention to all of the relevant circumstances in which the financial product advice is given. Section 766B(3)(b) requires an assessment of what a reasonable person would expect in those circumstances.

Westpac’s intentions

136    ASIC’s case was that each “recommendation” or “statement of opinion”, made by a caller to one of the 15 customers, was intended by the caller to influence the customer in deciding to consolidate their external accounts into the relevant BT account.

137    Westpac did not dispute that its “messaging” was plainly intended to encourage customers to roll over their super into their existing BT account. However, Westpac noted that in some cases, the customer apparently needed no encouragement: it was evident from the terms of the conversation that they had made a decision to consolidate their accounts at the commencement of the call.

138    Ultimately, Westpac did not dispute the subjective intention of the callers to influence the customers in the way regulated by s 766B(1)(a), although senior counsel for Westpac, Mr McHugh SC, noted that a consideration of the individual calls reveals that the position was more complex and this should not be understood to have been the sole purpose of the callers. In particular, Westpac ultimately accepted that a social proof in the form of “They’re probably the two main reasons our clients do like to consolidate” clearly reflected an intention to influence and encouragement. However, as Mr McHugh SC noted, the calls included recorded messages played for compliance reasons which could not be characterised as intended to influence the customer.

Issues for determination

139    In relation to ASIC’s case based on s 766B, the issues for determination are:

(1)    For each of the 15 calls, did the relevant caller provide one or more “recommendations” and or “statements of opinion” to the customer and thus provide financial product advice within the meaning of s 766B(1)?

(2)    If the caller provided a “recommendation” or a “statement of opinion”:

(a)    was that “recommendation” or “statement of opinion” intended to influence the relevant customer in making a decision in relation to their BT account or their external accounts, each such account being a particular financial product?; or

(b)    could that “recommendation” or “statement of opinion” reasonably be regarded as being intended to have such an influence?

(3)    For each of the 15 calls, did the personal matters about the customer identified by ASIC in its “Particulars of Claim” constitute the customer’s “objective, financial situations or needs” within the meaning of s 766B(3)?

(4)    Whether any financial product advice was provided in circumstances where the relevant caller considered one or more of the customer’s objectives, financial situations or needs?

(5)    Whether any financial product advice was provided in circumstances where a reasonable person might expect the caller to have considered one or more of the alleged objectives, financial situations or needs?

140    Section 140(2) of the Evidence Act 1995 (Cth) applies in this case, which involves claims for civil penalties: see Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (In Liq (No 2) [2017] FCA 709 at [8]. Accordingly, it was necessary for ASIC to establish its case by clear and cogent proof of the necessary elements of the alleged contraventions.

Communications with customers

141    At all material times, four of the 15 customers (customers 1, 2, 6 and 7) were members of the BT Lifetime Account Fund; the remaining 11 customers (customers 3, 4, 5, 8, 9, 10, 11, 12, 13, 14 and 15) were members of the BT Business Account Fund.

142    Each of the customers was sent written communications by which BTFM or WSAL:

(1)    offered to search for any “external accounts” that the customer had;

(2)    offered to roll over any “external accounts” held by the customer into his or her BT account; and

(3)    sought to influence the customer to take up such offers.

143    In the case of each customer except customer 15, there was evidence that they were sent an “annual super statement letter”. This letter enclosed the customer’s annual super statement for the year ended 30 June 2014, and stated:

It’s a great time of year to review your financial situation and make sure your super is working hard for you. On average, most Australians will receive three super statements around this time of year. By having multiple super accounts you’re probably also paying multiple administrative fees. However, if you combine your super into one account, you could save on administrative fees and enjoy the convenience of having all your super in the one place. To help get you started, we’ve enclosed a Rollover form, simply complete the form and return it in the reply paid envelope and we’ll do the rest.

Let us help find all your super

Did you know that there’s $18.2 billion in lost and ATO-held super in Australia and some of it could be yours? With your consent we can search for any other super you may have on a regular basis.

Visit bt.com.au/supermatch and enter your unique security code …, member number … and details to give your consent. We’ll search any other super you may have on a regular basis. It’s that easy, so why not get started today.

144    The letter contained a disclaimer which, relevantly, disclosed a possible fee of up to 1% for accepting rollovers; recommended that the customer “check with your other fund/s to determine whether there are any exit fees for moving your benefit, or other loss of benefits (e.g., insurance cover); states that it provided an overview or summary only “and it should not be considered a comprehensive statement on any matter or relied upon as such”. The disclaimer also states:

This letter doesn’t take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it.

145    In most, but not all, cases, following an offer to search, the relevant customer accessed the BT website and requested that a search be conducted to locate amounts held on his or her behalf in external accounts. Such a request was made by all the customers except customers 9 and 14 (although, in the case of customer 15, the request was made after he had also received a telephone call from a Super Activation Team member).

146    In some, but not all cases, following the search request, BTFM or WSAL sent the customer a letter which set out the results of the requested superannuation search. This occurred in the cases of customers 1, 3, 6, 11 and 13. ASIC’s case does not allege that customers 2, 4, 5, 7, 8, 10 and 12 were sent such a letter (or customers 9 and 14).

147    In each case, the telephone call to the customer (or at least the first call) commenced with a statement by the caller to the effect that the call concerned their BT account.

“General advice warnings”

148    As appears below, in the call to customer 1, caller AA said “everything discussed today is general in nature, it won’t take into account your personal financial needs”. Each customer received a similar though not identical statement, referred to by Westpac as a “general advice warning”. Particularly, some “warnings” ended with the caller noting that they would not take into account the customer’s “personal needs”, “personal needs and objectives” or “personal needs, goals or objectives”, rather than the customer’s “personal financial needs” (as caller AA said to customer 1). Nothing turns on this difference in semantics.

Customer 1 (caller AA)

149    Caller AA called customer 1 on two occasions on 1 October 2014.

150    Prior to the calls, BTFM sent three relevant pieces of correspondence to customer 1, dated respectively 23 July 2014 (annual super statement letter), 11 August 2014 and 29 September 2014.

151    The 11 August 2014 correspondence was headed “[customer l], let us do the legwork and you could WIN” (“Let us do the legwork” letter). To the right of the page was a green spot containing the words “WIN one of two $10,000 travel vouchers”. The letter also included the following:

When your to-do list is ever growing, combining your super is left in the too hard basket. Yet in less than two minutes you can give BT your consent to search for all your other super and help sort it out for you.

Give us the OK to combine your super by 30 September and you’ll have the chance to win one of two $10,000 Flight Centre vouchers. Then you can relax knowing there’s one less thing on your to-do list.

By combining all of your super into your BT super account, you’ll pay just one set of fees, cut down on paperwork and make it easier to track your super’s performance. So take the load off and let us do the hard work for you.

152    Under the heading “Things you should know”, in very small pink font, is a disclaimer to the effect of the disclaimer noted at [144] above.

153    On 10 September 2014, customer 1 accessed the BT website and requested a search be conducted to locate amounts held in External Accounts. As part of requesting that search, customer 1 completed an electronic form, including checking a button beside the words “I agree to giving consent for SuperMatch”. Under those words was the following:

By ticking this box I consent to BT Limited – Personal Super, BT Retirement Selection – Personal Super BT Classic Lifetime – Personal Super, BT Superannuation Savings Fund, BT Superannuation Investment Fund, BT Lifetime Super – Employer Plan and BT Business Super (BT Super) using my Tax File Number (TFN) to search Australian Taxation Office (ATO) records to locate superannuation amounts held on my behalf by other superannuation funds or by the ATO now and in the future. If search results include superannuation amounts held on my behalf by the ATO. I also consent to BT Super requesting the ATO to transfer those amounts into my BT Super account where possible and using and disclosing my TFN for that purpose. Once you provide your consent it will be held in perpetuity this will allow BT Super to complete periodic searches on your behalf of which you will be notified. If at any time you wish to remove your consent please contact BT Customer Relations on 132 125. For details regarding the use of your personal information please refer to the BT Privacy Policy.

154    On 29 September 2014, BT sent a letter to Customer 1 which set out the results of the superannuation search which she had requested. The letter stated, relevantly:

Having your super in multiple places may mean you’re paying multiple sets of fees. By bringing it together in one account, you could potentially reduce fees and paperwork.

155    Again, the letter contained a disclaimer to the effect of the disclaimer noted at [144] above.

156    On 3 October 2014, in the course of the Q4 campaign, caller AA called customer 1 twice, at about 11:22 am and 11:58 am.

157    By the time of the first call, customer 1 had not communicated any decision to BTFM that she wished to roll over her superannuation from any external accounts into her BT account (except in relation to superannuation held in any ATO accounts). She had merely requested that a free superannuation search be conducted on her behalf.

158    The following portions of the transcript which recorded the first call are relevant:

CALLER:    …Look, it was just a quick courtesy call regarding your BT Superannuation account, we’ve just had some superannuation search results.

[…]

    We’ve got some results here we’d like to help you bring them over to your account to potentially save you on fees.

[…]

    So before we continue I do need to let you know… everything discussed today is general in nature, it won’t take into account your personal financial needs. Is that okay?

C1:    All right, yeah, not a problem.

CALLER:    Now, before we get started can I ask you a few quick questions so I can help you.

C1:    Yeah, yeah.

[…]

CALLER:    So what was the main reason you asked us to look for your superannuations?

C1:    Because I know I’ve got a few out there […] and I wanted to roll it all into one.

CALLER:    Right, and what did you see as the main benefits of bringing them altogether to the one place?

C1:    Just – well, like you said, fees, it’s the whole thing. […] Because they’re all over the place and I got little bits here and little bits there, so you lose those.

CALLER:    I see, yeah, right, right. So it sounds like manageability and also the saving on the fees, potentially. Is that right?

C1:    Yeah, yeah.

CALLER:    Fair enough, no worries. Look, they are the two main reasons our clients do like to bring their supers together, it does make a lot more sense from a management point of view, for sure.

C1:    Yeah.

CALLER:    Now, what we can do is we can go through your superannuation search results and we can actually help you bring them altogether over the phone now, the only thing we’ll need from you today to do that is your tax file number.

159    For the second call, ASIC relied on the following conversation:

CALLER:    Yeah, I’m good, [C1]. Did you manage to grab that tax file number?

C1:    Yes, I’ve got the number.

CALLER:    Fantastic. Now before you give it to me I’ll just let you know that the call’s being recorded […] and everything discussed today is general nature, won’t take into account your personal financial needs. Is that okay?

C1:    Yeah, all good. All good.

[Caller AA proceeded to recite the various superannuation funds that had been found. C1 indicated then that she thought one fund from “Catholic School” seemed to be missing.]

C1:    … No Catholic school?

CALLER:    No.

C1:    Okay.

CALLER:    Yeah. Did you – if you have the account details of that one you could actually just send it to me via email and I can…

C1:    Yeah, all right. I’ll have a – I’ll have a look. I probably haven’t got anything in there.

CALLER:    Oh, I see, that’s probably why, but – it could have been potentially swallowed up by fees and that’s why it hasn’t turned up in the search.

[AA proceeds to arrange the rollover.]

CALLER:    Great, not a problem at all, [C1]. Just to recap, I’ll process the – your request in the next 10 minutes. You’ll get a confirmation email from us. […] And everything gets rolled over in two or three weeks, so it’s all in the one spot and nice and organised for you. How does that sound?

C1:    Yes, sounds good. […]

Customer 2 (caller AA)

160    Caller AA called customer 2 on 1 October 2014.

161    Prior to the call, BTFM sent four relevant pieces of correspondence to customer 2.

162    The first was an email (“Win $20,000” email) sent in around April 2014. It included a prominent blue box containing the words “You still have time to WIN $20,000 cash*” and, underneath, the following:

How would you spend the cash? This decision could be yours when you combine $5,000 or more of your super into your BT super account by 30 May 2014.

One super account means less hassle and paper work.

There’s only one [sic], so why have more than one super account? There may be no need to. By combining all your superɅ into your BT super account you could stop paying multiple account keeping fees, which is one way to help your super grow. Plus, having your money in one place can make it easier to manage.

163    The symbol ^ following “combining all your super” refers to the following statement which forms part of a larger disclaimer, including a statement to the effect of the disclaimer described at [144] above:

Before requesting the rollover, you should check with your other fund/s to determine whether there are any exit fees for moving your benefit or other loss of benefits (e.g. insurance cover).

164    The second was another email, sent in around July 2014 (“Take your super out of the too hard basket” email).

165    The email included a prominent blue box containing the words “Take your super out of the too hard basket” and included the following messages:

•    Take your super out of the too hard basket” [Accompanied by a checklist of items: ‘Lodge tax return’, ‘Organise health insurance’, ‘Sort out super’, ‘Join the gym’]

•    When you’ve got a lot on your plate, your super is left in the too hard basket. We know we should combine our super, but it takes ages, right? Wrong. In just one click you can get BT to help take care of it for you.

•    By combining^ all your super into your BT super account, you could stop paying multiple fees and help your super grow. Plus, it’s easier to manage when it’s all in one place. So sit back and let us do the hard work for you.

•    Get sorted to win.

•    Why combine your super?

Only pay one set of fees

Cut down on paperwork

•     It’s easy to track your super’s performance.

166    There was a disclaimer at the end of the email, in similar terms to the earlier email and substantially similar to the disclaimer at [144] above.

167    The third, a letter dated 23 July 2014, was in the form of the annual super statement letter.

168    Finally, there was an email sent in September 2014, also headed with a prominent blue box containing the words “Take your super out of the too hard basket” (“Last chance” email). This email contained the following messages and the same disclaimer as the other emails:

•    Take your super out of the too hard basket [Accompanied by a checklist of items: ‘Lodge tax return’, ‘Organise health insurance’, ‘Sort out super’, ‘Join the gym’]

•    It’s your last chance to combine your super for a chance to win one of two $10,000 Flight Centre travel vouchers.

•    We understand you’ve got a lot on your plate and sorting your super could take ages and that’s why it’s often left in the too hard basket … you can relax and unwind knowing there’s one less thing on your to-do list.

•    By combining all your super into your BT super account, you could stop paying multiple fees and help your super grow. Plus, it’s easier to manage when it’s all in one place. So sit back and let us do the hard work for you.

•    Get sorted to win.

•    Why combine your super?

Only pay one set of fees

Cut down on paperwork

It’s easy to track your super’s performance

169    The following portions of the 1 October 2014 call are relevant:

CALLER:    Look, [customer 2], I’m calling about your BT Lifetime Super Account that you have here with us. […] Yeah, just a quick courtesy call today to see how you’re tracking and also to go through your superannuation search results and potentially save you on fees by bringing them over to your account here.

    […]

CALLER:    Now, look, before we continue we’ll need to let you know the call is being recorded and everything discussed today will be general in nature and won’t take into account your personal needs. Is that okay?

C2:    Yeah it is. […]

CALLER:    So, what was the main reason you asked us to look for your supers? Hello?

    […]

C2:    Yep, that’s [indistinct] I’m retiring, mate, and I just need to get them all put together.

CALLER:    Oh, I see, I see. And, you know, what do you personally see as the main benefits of bringing all your supers into the one account?

C2:    Yeah, the fees, easy to manage, I suppose, and all that.

CALLER:    Okay. So saving on those fees and – that’d be the most important factor for you, would you say?

C2:    Yeah, that’s right.

CALLER:    Fair enough. No worries. Look, you’re not alone there. Most of our customers say the same thing. It does make a lot more sense to pay, you know, only one set of fees, potentially, and – rather than multiple so – now, what we can do for you today is we can actually help you bring all your accounts over to your BT account over the phone and do it all electronically. It saves you from having to do any forms and that way you can start potentially saving on those fees. Is that something I can do for you today?

C2:    Yes.

    […]

CALLER:    All right, fantastic. Now do you know roughly how much you might be bringing over from those two other accounts?

[…]

CALLER:    Look, just to recap, I’ll process your rollover in the next five minutes. You’ll get a confirmation email. Everything gets rolled over into your BT Lifetime Super account in the next two or three weeks so it’s all in the one spot so you start potentially saving on those fees. How does that sound?”

Customer 3 (caller BB)

170    Caller BB called customer 3 on 2 October 2014 and 10 October 2014.

171    Prior to the call, WSAL sent him two relevant pieces of correspondence. The first, dated 14 August 2014, was substantially in the form of the annual super statement letter.

172    The second, dated 24 September 2014, was a letter which provided the results of a super search conducted by Westpac at Customer 3’s request (“search results letter”). The letter included the following:

Next steps

Having your super in multiple places may mean you’re paying multiple sets of fees. By bringing it together in the one account, you could potentially reduce fees and paperwork.

173    The letter included a disclaimer similar (but not identical) to the disclaimer on the annual super statement letter.

174    The following portions of the 2 October 2014 call are relevant:

CALLER:    Have I got you at a good time to have a chat in regards to your BT Business Super account that was set up previously by your employer?

    […]

CALLER:    Great, thank you. I do just need to let you know that this call is being recorded for quality and training purposes and just anything we discuss today is just general in nature and doesn’t take into consideration your personal needs. Is that okay?

C3:    That is fine, [BB].

CALLER:    Thank you so much. Now, [customer 3], you may have approved us to complete a super search on your behalf to see if we could locate any other external superannuation accounts.

C3:    Yes, I did that a bit over a week ago, I think.

CALLER:     Perfect.

C3:    I’ve actually been waiting for you guys to call me.

CALLER:    Great. I’m glad I’ve got a hold of you. So that’s definitely the reason for my call today and to see if I can assist you in combining those into your BT Business Super account today.

[…]

CALLER:    So that’s definitely the reason for my call today and to see if I can assist you in combining those into your BT Business Super account today.

C3:    Yes, I would like to do that.

    […]

CALLER:    Now, for us to combine those into your BT Business Super Account I absolutely can do that today. I just would need to let you know that if you held any insurances with those funds […] that they would be cancelled because you’d be closing off the accounts and bringing the balance across. Would that be okay?

C3:    Well, what insurances do I have with you people?

CALLER:    Yeah, of course. Let’s go through those. So currently at the moment you’ve got death cover and total permanent disablement cover of $60,000. […] and that’s with a monthly premium cost to you at $33.80. […] So if you wanted to increase that level of cover I can send you an email with an application attached to do that at a later date or we could do that –

C3:    That would be really good.

CALLER:    Or you could do that before we actually rolled in the external funds, whatever you feel more comfortable with.

C3:    Yeah, look, as soon as I roll over the funds the better, I think.

    […]

CALLER:    But just to let you know though that the insurances, as I mentioned, would be cancelled. So you’re okay with that.

C3:    Yeah, I’m fine with that, no problem.

    […]

C3:    Just one thing, what are the charges? What are the costs involved in having it all transferred?

CALLER:    Yeah, of course. We don’t charge you anything at BT. […] We just put that in the script because the other external funds may charge you an exit fee. […] Now, there is not an industry set standard. Some funds will charge you nothing, others may charge you, say, 30 to 40 dollars as an exit fee. […] I don’t know what your other funds would charge, if there would be any applicable fee at all. […] What we do find is most of our clients do prefer just to pay the one-off exit fee rather than paying ongoing other fees. […] But completely it’s your call, [customer 3].

[Caller BB then calls up customer 3’s other fund with customer 3 on the line and inquires about what exit fee would be payable by customer 3 on his external account.]

[Customer 3 inquires about whether it is possible to “bring my level of insurance up to where it was with MLC as well”. Caller BB agrees to send him the form for that and to be in touch over the next few days.]

175    ASIC also relied on the following portions of the 10 October 2014 call:

[Caller BB discusses what customer 3’s insurance is on his other accounts and asks what customer 3 would like to do with his insurance. BB indicates that to increase customer 3’s insurance would require a “whole new application process”].

C3:    Yeah, and I don’t want to go through the process. I haven’t got the time for it.

CALLER:    So, look, failing – I mean, you’re well and healthy, [customer 3]?

C3:    Reasonably.

CALLER:     Yeah, okay.

C3:    Look, you know, I’ve got to be honest, I’m a type II diabetic. […] Which I’ve had that for, I think, nine years now. […] But it doesn’t stop me from doing anything like playing golf or doing normal activities. […] It doesn’t affect my work. It really doesn’t affect much of what I do at all to be honest. […]

[Caller BB agrees to send him a letter in the mail confirming what was being offered.]

CALLER:    The guide obviously that I’m giving you today is a good indication, I would hope. […] And, look, once that’s all in place and you’re comfortable with the cover then we can obviously roll in that MLC policy and have everything propped [sic] into your BT account.

[Customer 3 complains about the time that this is taking him and that he wanted to do this quickly.]

CALLER:    Look, I do apologise for that [the time customer 3 spent on the phone with MLC]. I mean, obviously that’s out of my control but, look, at the end of the day I was hoping to get you […] you know, in a better position so that – I mean, you mentioned you weren’t really happy with MLC so […] this is the kind of process, I guess we need to go through. I mean, that form is only – it’s only a few pages long, it’s not that involved.

[CALLER then assists C3 filling out the forms that he needs to fill out.]

CALLER:    Look, as far as MLC goes – as you mentioned, it’s out of my control there but if you can pop that through and I’ll keep an eye and look, once it’s all in place I can call you back and then we can see if you still want to go ahead with posting off that […] rollover form to MLC. […] As I said, it’s completely up to you, [customer 3], if you’d like to do it or not. I was just hoping that I was being helpful”.

Customer 4 (caller FF)

176    Caller FF called customer 4 on 7 October 2014.

177    Prior to the call, WSAL sent customer 4 two relevant pieces of correspondence.

178    The first, sent on about 11 August 2014, was a “Let us do the legwork” letter.

179    The second, sent on about 27 August 2014, was an annual super statement letter.

180    The following portions of the 7 October 2014 call are relevant:

CALLER:    I’m calling in relation to the super account that you’ve got with us. […] You asked us to do a search for you to find any other super accounts that you’ve got out there.

C4:    Yeah, that’s right.

CALLER:    Yeah. So, we’ve got the results and I’m ringing to see if we can combine it all for you--

C4:    Yeah.

CALLER:    --and possibly save you on time and fees.

C4:    Yeah.    

CALLER:    Now, just before I continue I need to let you know that anything we discuss is general in nature and won’t take into account your personal needs and objectives.

C4:    Yep, no worries.

    […]

CALLER:    Great. And so I can make the most of your time, do you mind if I go through a few questions with you?

C4:    No, that’s fine.

CALLER:    That’s okay. So what was your reason for wanting to find your other superannuation accounts?

C4:    To cut down on fees and stuff, just have them all in one place where I can look at it and manage it, I guess.

CALLER:    Okay. You wanted to save on fees and also be able to see what you’ve got as well and manage better?

C4:    Yeah, that’s right.

CALLER:    That’s okay, that’s fine. […]

[…]

CALLER:    Okay, great, thank you, all right. So we found one account at AustSafe. Did you have any other super accounts apart from that one?

C4:    No, not that I could remember, no.

CALLER:    Okay, that’s fine. So what we can do is we can combine that AustSafe account into your BT account. […] It’s a very simple process to do that. All we need is your tax file number […] play you two legal recordings and then from then on we’ll act on your behalf and organise it all for you.

    […]

CALLER:    So I’ll play you the last recording. So this one allows us to do everything for you over the phone […] and we don’t have to fill out any paperwork.

    […]

CALLER:    All right, great. So I’ll organise to have that done for you. And did you know roughly how much you had in that account?

    […]

CALLER:    Great [indistinct] also organise everything combined for you and hopefully will make it a bit easier for you to manage and you’ll save on things like fees as well.

Customer 5 (caller DD)

181    Caller DD called customer 5 on 2 October 2014.

182    Prior to the call, WSAL sent three relevant pieces of correspondence to customer 5.

183    The first, sent on about 29 July 2015, was a “Take your super out of the too hard basket” email.

184    The second, sent on about 7 August 2014, was an annual super statement letter.

185    The third, sent on about 17 September 2014, was a “Last chance” email.

186    The following portions of the 2 October 2014 call are relevant:

CALLER:    […] The reason for my call today is in regards to your superannuation account with BT. […] I’m calling to touch base to see how everything is going with it for you and to see if I can help you combine the super we found through the super search you’ve initiated, to potentially save you on some fees.

    […]

CALLER:    Now, before I go any further, I will let you know that this call is recorded for quality and training purposes.

[…]

CALLER:    And anything you and I discuss today is general in nature and does not take into account your personal needs, goals or objectives. Is this okay?

C5:    Yep, no worries.

CALLER:    Now, so that I can focus on what’s important to you today, is it okay that I ask you some questions in regards to your superannuation?

C5:    Yeah.

CALLER:    Excellent. What was the reason that you set up the super search with us?

C5:`    I originally called to find out some details about my account and the person I spoke to suggested I do it because there was a – it was an unusually low amount for someone my age apparently. […] So he set up the search for me.

CALLER:    Right, okay. [Customer 5], how many superannuation accounts are you aware of that you’ve got out there?

C5:    I had thought I had already put them into one but I must have missed a couple.

[…] I decided to consolidate everything but I had a lot of other employers before then […]

CALLER:    So do you think you may have multiple accounts with us?

C5:    I don’t think I have multiple accounts with you but I think when I consolidated them with you guys, I thought that was the one that my employer had set up for me but I’m not sure it was.

CALLER:    Sure, well, I can definitely have a look at that for you.

[Conversation follows about the different superannuation funds customer 5 is a member of]

CALLER:    Now, in terms of that account, I can definitely help you and combine it all in the one place. What was the reason that you wanted to put all your super altogether?

C5:    Just to keep track of it, like you said, you lose it here and there, you forget which accounts you’ve got.

CALLER:    So it’s pretty much for the management of your superannuation. Is that right?

C5:    Yeah, just to keep track of it.

CALLER:     Perfect, okay.

C5:    Easier.

CALLER:    Now, [customer 5], in terms of that super fund, I can definitely help you with. All I need from you today would be the tax file number because I already have the account number for Australian Super.

[…]

CALLER:    So, just to recap the call, what’s going to happen from here is I’m submitting the rollover request for you now.

C5:    Yeah.

CALLER:    All your super is going to come into the one place from the next two to four weeks, for easy management for you.

Customer 6 (caller AA)

187    Caller AA called customer 6 on 3 October 2014.

188    Prior to the call, BTFM sent two relevant pieces of correspondence to customer 6.

189    The first, dated 30 July 2014, was a letter relevantly identical to an annual super statement letter.

190    The second, sent on about 24 September 2014, was a search results letter.

191    The following portions of the 3 October 2014 call are relevant:

CALLER:    Look, today I’m calling about your BT Lifetime superannuation account. Are you happy with us? […] Just a quick courtesy call today and also to go through your superannuation search results and potentially save you on fees by bringing them over to your account.

    […]

CALLER:    Now, just before we continue do you mind if I ask you a few quick questions so I can best help Sure.

CALLER:    Great. So what was the main reason you asked us to look for your supers?

C6:    Well, I’ve got a few floating around, I just thought it would be easier and save fees and that if I just put them all together.

CALLER:    Okay, rightio. So you mainly wanted … to have that easier manageability and also potentially save on fees.

C6:    Yeah.

CALLER:    Those are the most important things for you when it comes to your super at the moment?

C6:    Yeah.

CALLER:    Yeah, fair enough, not a problem. Looks, that’s one of the – they’re probably the two main reasons that our clients do like to consolidate. It definitely makes a lot of sense from a logical standpoint. So what we can do for you today is actually go through your supers and actually bring them all over to your account so you can start potentially reaping those benefits. How does that sound?

C6:    Okay, cool, yeah. […]

CALLER:    So I can see here that we found for you one account only, so Hostplus. You mentioned that you […] had a few. Were you aware of any others?

C6:    I’m not sure. I’ve had a few jobs, I’m not sure if even paid me super but.

CALLER:    I see, I see. Well, look, if you didn’t work for them for very long there might not have been too much in there which may have potentially been eaten up by fees.

C6:    Yeah.

CALLER:    So that’s probably why we only found the one. […]

CALLER:    So did you know roughly how much you might be bringing over from your Hostplus account by any chance just as a rough ...

C6:    No idea.

CALLER:    Okay. Can you remember who – which of your employers used that account?

C6:    Yeah, it was the Big Group.

CALLER:    Okay. And how long were you with them for?

C6:    Maybe eight months or something.

CALLER:    Eight months full-time?

C6:    No, casual.

CALLER:    I see, I see, not a problem at all. […]

CALLER:    Just to recap I’ll process your rollover in the next 10 minutes. Everything gets rolled over – sorry, you’ll get a confirmation email and it all comes into your account in the next two or three weeks so it will all be in the one spot, nice and organised and you potentially start saving on those fees. How does that sound?

Customer 7 (caller AA)

192    Caller AA called customer 7 on 20 November 2014.

193    Prior to the call, BTFM sent two relevant pieces of correspondence to customer 7.

194    The first, sent on about 17 February 2014, sent on about 17 February 2014, was a letter picturing a male taking a selfie next the words “There’s only one [customer 7]” (“There’s only one you” letter), and containing the following statements relied on by ASIC:

•    If you’ve had more than one job, you probably have more than one super account. Yet multiple super accounts can be hard to keep track of and could be costing you in account keeping fees. We can help combine your other super into your BT Business Super account, leaving you with just one super account to manage. And what you could save on fees, could mean more money in your super.

•    Give us the OK and we’ll help search for your other super accounts in order to roll them into your BT Business Super account.

•    Give your consent to do a super search and we can help track down your other super accounts – it’s that easy!

•    Win $20,000 cash prize.

•    Sort your super for your chance to win. There’s only one you and only you know how you’d spend $20,000. We’re giving you the chance to do just that. Simply combine $5,000 or more of your other super into your BT super account by 30 May 2014 to go into the draw to win.

195    Like the other forms of written correspondence, there was a disclaimer to the effect of that set out at [144] above under the heading “Things you should know”.

196    The second, sent on about 14 August 2014, was in the form of the annual super statement letter.

197    The following portions of the 2 October 2014 call are relevant:

CALLER:    Hi there, [caller AA] calling from BT Financial Group I’m looking for [customer 7], please.

C7:    Yes, speaking.

CALLER:    Hey, [customer 7], how are you today?

C7:    Good, how are you?

CALLER:    I’m good, thanks for asking. Look, I was just calling about your BT Lifetime superannuation account - - -

C7:    Sure.

CALLER:    - - - that you’ve got here with us. So just a quick courtesy call with you today to check in with you to see how you were going and also we did a superannuation search on your behalf recently and we’d just like to go through the results with you and help you organise your supers by combining them to your account.

C7:    Excellent.

CALLER:    All right. Now, before we continue with that [customer 7] I will just let you know the call is has been being recorded for quality and training and everything we discuss today is general and won’t take into account your personal and financial needs. Is that okay?

C7:    No problem.

CALLER:    Okay, great. And so I can best help you and make the most of your time, can I ask you a few questions, please.

C7:    Sure.

CALLER:    All right, [customer 7], so what was the main reason that prompted you to ask us to look for your supers?

C7:    The usual reasons. You know, I guess you get more interest - - -

CALLER:    Mm.

C7:    - - - when you’ve got more money in there, I guess.

CALLER:    Okay, fair enough. So that’s something that a lot of our client say. Is that – so basically one of the main reasons was to bring it all together to create a bigger pool of money to potentially get performance out of it. Is that right?

C7:    Yeah, and I heard the other day that you can also – I guess you pay costs for each one you have so you reduce the costs to one super.

CALLER:    Okay. So it sounds like you just wanted to pay one set of fees and avoid multiple sets of fees.

C7:    Yeah.

CALLER:    Yeah, fair enough though. Again, one of the other main reasons our clients like to consolidate. So what we can do for you, we’ll help you bring across your other supers today and that way you can just pay that one set of fees and you’ve got potentially a larger pool of money where you can get a potentially better return from. How does that sound?

C7:    Very good.

CALLER:    All right. Now, I’ll just get you to confirm for me your date of birth and address so we can talk about your account.

    […]

CALLER:    Yeah, too easy. Now, the only thing that we need from you today to get your verbal consent to do the consolidation for you over the phone is your tax file number. So did you have that on hand today?

C7:    Yes, I do.

CALLER:    Okay, great. So don’t give it to me just yet because I will need to play you a legal script first. Now, keep in mind any insurances on that account we’re bringing over will be cancelled upon transfer. Are you okay with that?

C7:     Sorry, what was that?

CALLER:    Any insurances that you have on the other account that you’re bringing across to your BT account will get closed when – once it transfers over so any insurances will be cancelled. Is that okay with you?

C7:    Yeah, yeah.

    […]