The CEO of the AIOFP, Peter Johnston, reports on the QAR saga

For those who are confused by all of the QAR legal and logistical angles over the past 11 months, below is a simplified summary of why we are against replacing BEST INTERESTS with BEST ADVICE and how WESTPAC’s lost legal battles has helped our cause.

Michelle Levy’s QAR Report is a cleverly structured document where all stakeholders gravitate to certain aspects but all issues seem to be contingent on eliminating the BEST INTERESTS DUTY and replacing it with BEST ADVICE concept.

This outcome will not be in the best interests of Consumers in our view. We think Institutions should receive a strictly worded legislated CARVE OUT where internal staff can discuss internal products with consumers and the Government should not CAPITULATE to pressure from the Institutional lobby and their aligned Associations.

We are the first to agree that Institutions should be allowed to have trained internal staff explaining/advising on their own internal products with consumers, it makes sense. But in order for this to happen, the Corporations Law needs to be changed to accommodate BEST ADVICE and eliminate BEST INTERESTS.

If this happens BEST ADVICE will open the door for Institutions to again implement their profoundly conflicted Vertically Integrated models and re – commence masquerading as Independent Advisers to dupe consumers, a return to the bad old days one could say.

Below is an opinion from the AIOFP’s expert Adviser on legal, compliance and advice issues, member Lionel Rodrigues. Lionel holds a Masters in Law/Financial Advice and just as important operates his own AFSL practice and still advises clients after 25 years in the industry. Academics on the ‘tools’ are a rare combination indeed.

We asked Lionel for his views on Institutions being permitted to have internal advisers exempt from the FASEA demands and any legal roadblocks that would prevent this from happening without changing the Corporation Law.

As you will see the recent WESTPAC HIGH COURT decision sums up the position concisely…


Thank you for the opportunity to comment.

The discussion points raised previously are practical matters for the efficient and profitable operation of a financial services business and not merely a debate on public policy. You correctly note that the previous government has been disastrous for the profession of financial planning and what needs to be done, championed by AIOFP, is the re-set the policy agenda and to  correct failed policy outcomes, for the  benefit of both advisers and consumers.

There is a view that some ‘carve outs’ may be necessary for the ‘institutions’ however that or they are defined. As the Corporations Act now stands, that would be difficult to achieve. This situation is made even more difficult by a recent and significant judgment which was decided by the High Court in 2021 on appeal from the Full Federal Court. However, the decisions by the two courts also provide statutory clarity, and may provide a solution.

In what is commonly known as the ‘General Advice Case’, Westpac wrote to its BT Superannuation members, via the ‘Super Activation Team’, offering to conduct, at no cost, a search for other superannuation funds that the consumer may hold and then to rollover those such funds into their existing BT Superannuation account.

ASIC prosecuted Westpac for giving financial product advice which was also personal advice. In the initial trial before Gleeson J, it was held that Westpac gave financial product advice however found that such advice was not personal advice. However, that court did find that Westpac had failed under its license to provide financial services advice, ‘efficiently, honestly and fairly’.

Both ASIC and Westpac appealed, and in ASIC v Westpac Securities & Anor [2019] FCAFC 187, the Full Court (Allsop CJ, Jagot and O’Bryan JJ) found that Westpac had provided personal advice, had failed to act in the best interest of the consumer and had not acted ‘fairly, honestly and efficiently’.

Subsequently, Westpac appealed this victory by ASIC, lodging such an appeal to the High Court; Westpac Securities Administration Ltd & Anor [2021] HCA 3.

The Federal Full Court found unanimously that Westpac had provided consumers with financial product advice.

S 766B(1) Corporations Act 2001 (Cth), defines financial product advice as being a statement or opinion that (a) is intended to influence a person or (b) could reasonably be regarded as being intended to have such influence.

Allsop CJ stated “there is not any bright line distinction to be made between sales and advice”. Jagot J, observed that “a statement of opinion could be made implicitly-it need not be express”.

The appeal to the High Court was only to consider; did Westpac provide personal advice. In the High Court, Kiefel CJ, Bell, Gageler and Keane JJ, unanimously agreed that Westpac had provided personal advice.

Chapter 7 of the Corporations Act provides for two types of advice; personal advice and general advice. Personal advice occurs where (a) the person’s objectives and financial needs are considered or (b) a reasonable person might have expected these matters to have been considered. Before the High Court, Westpac argued, firstly that the calls began with a ‘general advice disclaimer’, secondly, the advice was offered at no cost and thirdly, the callers did not have knowledge about the consumer’s financial situation. The High Court rejected all of these points. The effect of this view by the High Court is that Westpac can give only ‘factual information’ about its product, but not advice. The High Court furthermore rejected a submission by Westpac that the definition of personal advice was ‘an active process of evaluation and reflection’.

The Full Court did consider the application of the ‘best interests duty’ under s961B Corporations Act 2001 (Cth), and found unanimously that this consumer protection provision, had been breached by Westpac. Furthermore, the Full Court also unanimously found that Westpac had breached s912A(1)(a) of the Corporations Act 2001 (Cth) , in that it did not provide financial services fairly. Allsop CJ observed “the impression [was] Westpac was there to help customers, when in fact it was there to help itself”. Jagot J informed the conduct was “sufficiently egregious.” Justice O’Bryan held that the Super Activation campaign was “inherently unfair to customers – in that it involved giving them personal advice, while disregarding their best interests”.

The above discourse supports your view that the institutions should not be allowed to masquerade or disguise what consumers deem to be ‘advice’. The courts have been very clear that only factual information can be given. In the above two cases, the Justices of both courts, were unanimous in their views as to advice and the duties and obligations owed to the consumer. I would recommend that the emphasis be given not on the terms ‘personal or general advice; but on only the provision of ‘factual product information.’ Under this situation then, there may not be any need for a the onerous responsibilities of licensing or to pass the FASEA exam. This could be the ‘carve out’ you were suggesting.

I am happy to discuss further with you at your discretion and convenience.


We hope this adds some clarity around the issue when the Minister releases his response to QAR shortly.


Peter Johnston | Executive Director
Association of Independently Owned Financial Professionals
Suite 1211, 1 Queens Road, Melbourne VIC 3004
P 1800 111 203, d 03 9863 7574, m 0418 857 621 | Download my business card

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