A Federal Court decision that found Westpac subsidiaries had breached their licences by offering personal advice to customers may have implications for insurance brokers.

National Insurance Brokers Association (NIBA) CEO Dallas Booth says the group will be looking at the case to determine to what extent the court’s comments are applicable more broadly.

“We are doing our own legal analysis on that at the moment,” he told insuranceNEWS.com.au.

“It could raise questions about the general advice model that many advice firms operate under whether it’s insurance broking firms or elsewhere.”

The Federal Court found in Sydney yesterday that Westpac had strayed from general advice and into personal advice during telephone calls aimed at encouraging customers to consolidate multiple superannuation funds into their BT accounts.

“The difficulty is that the decision to consolidate superannuation funds into one chosen fund is not a decision suitable for marketing or general advice,” Chief Justice James Allsop said.

“It is a decision that requires attention to the personal circumstances of a customer and the features of the multiple funds held by the customer.”

Justice Allsop says whether advice is personal or general includes consideration of the communication in its whole relational context, and the Westpac calls were made to existing customers and in a tone exhibiting a desire to help.

“Westpac attempted, assiduously, to get the customer to make a decision to move funds to BT without giving personal financial product advice as defined in the legislation. It failed,” he said.

Justices Jayne Jagot and Michael O’Bryan also ruled against Westpac and in favour of the appeal by the Australian Securities and Investments Commission (ASIC).

“The rub in the present case is that while Westpac may have perceived what it was doing as a marketing campaign in the interests of Westpac, its campaign consisted of making calls to existing Westpac customers on the basis that the purpose of the call was to help the customer in respect of the customer’s superannuation,” Justice Jagot said.

“While the customer would assume that Westpac was making the call to the customer self-interestedly, the customer would also assume that Westpac was making the call in the customer’s interest.”

The parties are to agree on declarations and orders to be made. If they can’t agree, they will make submissions for the court to decide.

ASIC says it welcomes the court ruling “which provides clarity and certainty concerning the difference between general and personal advice for consumers and financial services providers”.

Westpac says it is “carefully considering” the judgement.

The decision is available here.