ASIC’s court victory over Westpac in its general advice case is more than a morale boost for the corporate regulator, and could pave the way for a reshaping of the terminology used to categorise financial advice.
On Monday a panel ruled for ASIC in its appeal against a 2018 lost case in which it accused Westpac of veering into personal advice when it persuaded 14 customers to roll multiple superannuation accounts into their in-house funds.
The win ends a torrid period for Australia’s regulators after ASIC also lost a responsible lending case against Westpac in August and APRA lost a best interests case against IOOF executives in September.
Moreover, the win will likely give ASIC Chair James Shipton encouragement to address further the problems within general advice. Shipton flagged the issue in July at a Committee for Economic Development Forum event in Melbourne, noting that “the industry’s shift towards general advice” may be contributing to consumer harm.
The warning comes after ASIC published its Financial advice: Mind the gap report in March, which concluded that most consumers were unable to clearly distinguish the key differences between general and personal advice.
Of particular concern was the finding that only 53 per cent of people in the study correctly identified general advice in a given scenario and only 19 per cent identified personal advice.
Shipton said at the time ASIC was looking at “testing more appropriate labels and descriptors for general advice”. The idea was also mooted by ASIC director of wealth management, Joanna Bird, in June at the Professional Planner Licensee Summit in Katoomba.
“There’s a big range of general advice,” Bird said. “There’s general advice that is pushing a product and there’s general advice which is just educational material. Maybe they shouldn’t be treated the same way.”
ASIC released a statement on Monday stating that it welcomed the ruling on the appeal case, “which provides clarity and certainty concerning the difference between general and personal advice for consumers and financial services providers.”