High Court considers the meaning of personal financial product advice

Articles Written by Austin Bell (Partner), Jared McLachlan (Associate)

On 3 February 2021, the High Court of Australia (HCA) handed down its judgment in Westpac Securities Administration Ltd v Australian Securities and Investments Commission [2021] HCA 3  (Westpac v ASIC). The HCA dismissed Westpac’s appeal and held that Westpac gave personal advice. This meant that Westpac breached other obligations, including the duty to act in the best interests of clients and to do all things necessary to ensure that the financial services covered by its license were provided efficiently, honestly and fairly.

Kiefel CJ, Bell, Gageler and Keane JJ gave separate reasons to Gordon J, but they agreed with Her Honour’s conclusion and orders. The case will return to the Federal Court of Australia for a relief hearing in which the Australian Securities and Investments Commission (ASIC) will seek pecuniary penalty orders to be made against the offending Westpac entities.

See our article on the judgment of the Full Court of the Federal Court and a copy of the judgment.

Key points

  • The HCA gave an expansive interpretation to the meaning of personal financial advice.
  • Westpac did not actually take into consideration the member’s objectives, financial situation and needs, but the HCA held that a reasonable person might have expected Westpac to have done so.
  • All of the relevant circumstances of a communication must be taken into account when determining what a reasonable person might have expected.
  • Warning a client that the communication was only general advice did not mean that personal advice had not been given.
  • An adviser ‘considers’ a relevant matter if that adviser takes into account the relevant matter.  There is no threshold of analysis or intellectual engagement beyond that which the usual or ordinary meaning of ‘consider’ would permit.
  • The requirement - that a reasonable person might expect an adviser to have considered one or more of the client’s objectives, financial situation and needs - will be satisfied where a reasonable person might have expected only one of those matters to have been taken into account. A determination of what a reasonable person might have expected requires a consideration of all of the circumstances, including the scope of the subject matter of the advice.
  • Where there is a pre-existing relationship of trustee and beneficiary between an Australian financial services (AFS) licensee and the client, a reasonable person in the client’s position might expect that a representative of the AFS licensee (such as a caller from a call centre) would have taken into account their  objectives, financial situation and needs when  communicating with them. It is irrelevant that the particular representative had no previous relationship with the client and did not have all of the information about the client that was within the possession of the AFS licensee.


Representatives of two Westpac AFS licensee companies called their existing clients, who were members in several superannuation funds, with the aim of getting the clients to roll their other superannuation accounts into their Westpac superannuation account. Each of the calls was premised with a general advice warning to the effect that the callers were not taking into account the individual’s financial objectives, situation or needs. Neither of the Westpac AFS licensees had the authorisation on its AFS licence to provide personal financial product advice.

Prior to the calls, Westpac sent the members written communications which contained offers to search for other external superannuation accounts and sought to influence members to roll their external accounts into their Westpac superannuation account. Some members received follow up letters.

Westpac was, on one view, very successful in its campaign. Gordon J notes in her judgment that Westpac increased its funds under management by almost $650 million between 1 January 2013 and 16 September 2016 as a result of the initiative.[1]

The crucial issue on appeal was whether the financial product advice provided by Westpac to the members constituted personal advice within the meaning of subsection 766B(3)(b) of the Corporations Act 2001 (Cth) (Corporations Act). In arriving at its decision, the HCA considered whether, in the circumstances in which the advice was given or directed, a reasonable person might have expected that Westpac had considered one or more of the member’s objectives, financial situation and needs as required by subsection 766B(3).

Interpretation of Personal Advice

The definition of personal advice in subsection 766B(3) of the Corporations Act has two alternate elements:

  1. the first limb requires financial product advice to be provided to a person after the provider of the advice has considered one or more of the person’s objectives, financial situation and needs
  2. the second limb requires that a reasonable person might expect the provider to have considered one or more of the person’s objectives, financial situation and needs when giving or directing financial advice in the circumstances.

Either of these elements must exist in order for personal financial product advice to be provided.

Gordon J paid particular attention to subsection 766B(3)(b) - what a reasonable person might expect – and noted that:

  • a reasonable person is a person standing in the position of the recipient of the financial advice. A test which is assessed objectively at the time in which the financial advice was given or directed;
  • the diction of “might expect” has a broader meaning than that of “would expect”, therefore the relevant standard is one of reasonable possibility as opposed to reasonable probability;
  • ordinary meaning should be applied to the phrase “to have considered”, thus rejecting Westpac’s submission that there be some sort of “nexus (in fact or by reasonable apprehension) between the adviser's consideration of the personal circumstances and the advice provided”;
  • the expression “one or more of”, put simply, applies where the provider has considered one or more of a person’s objectives, financial situation and needs. Therefore, it is sufficient that the reasonable person might expect that the adviser took one of these into consideration, not all of them; and
  • the phrase “objectives, financial situation and needs” takes its ordinary meaning and must also be specific, and thus personal, to the recipient of the financial advice. The fact that one or more of these matters may be common to most people does not mean that they will cease to be personal to an individual.[2]

Finally, Gordon J noted that the specific purpose of subsection 766B(3)(b) was to focus on “what a reasonable person would expect "the provider" – not the retail client – to have done”.[3]


The case provides much needed certainty on the interpretation of the meaning of personal financial product advice. The case was initiated by ASIC in December 2016, prior to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. The final judgment from the HCA has been handed down at an opportune time since ASIC is currently considering the future regulation of advice. Submissions closed on 18 January 2021 to ASIC’s Consultation Paper 332: Promoting access to affordable advice for consumers.

Whether, and if so, how, the HCA’s judgment will affect any regulatory changes to the provision of personal financial product advice remains to be seen. Even before the HCA handed down its judgment, ASIC’s regulatory guides were due to be updated. Table 1 of ASIC Regulatory Guide 244: Giving information, general advice and scaled advice (RG 244), states that:

“you can provide general advice to a client even if you have personal information about the client. We will not consider general advice to be personal advice if you clarify with the client when you give the advice that you are not giving personal advice, and you do not in fact consider the client’s relevant circumstances (i.e. their objectives, financial situation or needs)”.

Clearly, ASIC considered that Westpac’s general advice warning at the beginning of the phone calls lacked the degree of clarity required by RG 244.

A more accurate description of ASIC’s regulatory approach was stated in a media release, where ASIC Commissioner Danielle Press affirmed that ASIC’s current position was to concentrate on enforcement action against misconduct, singling out the provision of advice that is not in the best interest of clients as a key area of focus.

In the immediate term, AFS licensees may need to consider their current communications with clients to determine whether they are personal financial product advice, and if so, whether they are complying with all of the regulatory requirements. Even those AFS licensees that are only authorised to provide financial services to wholesale clients may want to examine their communications to ensure they are not providing personal financial product advice, in particular if their AFS licence only authorises them to provide general financial product advice.

[1] Westpac v ASIC, [42].

[2] Westpac v ASIC, [57]-[63].

[3] Westpac v ASIC, [65].

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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