SYDNEY, Dec 21 (Reuters) - Australia’s Westpac Banking Corp did not breach its licence during a drive to boost its pension funds, an Australian court found on Friday, dismissing a regulator’s claim even as it chided the bank for failing to treat its customers honestly.
The Federal Court found that Westpac’s sales campaign in 2014 that involved contacting customers and asking them to shift superannuation funds into the company’s accounts did not amount to providing financial advice against licence conditions.
The ruling is a blow for the Australian Securities and Investments Commission (ASIC), which is already under pressure for allowing bad behaviour to proliferate following damaging revelations of misconduct at a recently concluded inquiry into the financial sector.
ASIC had brought the case against Westpac and its funds-management arm, BT Funds Management, in 2016 alleging they had broken licence conditions.
For Westpac, and its BT division, the dismissal means no fine will be imposed, but the court’s criticism is still an embarrassing admonishment for a big Australian bank after a year of near constant scandal in the sector.
Judge Jacqueline Gleeson said she was persuaded that Westpac had failed to act honestly and fairly since the campaign was aimed at benefiting the bank rather than customers.
“Westpac focused on its own interests and did not seek to act in the best interests of its customers,” she said.
The bank contacted customers by mail and phone offering to help them shift money from other superannuation savings accounts as part of its sales campaign that boosted its own holdings by about A$650 million ($460 million) between 2013 and 2016, Gleeson said in a written judgement.
But after reviewing transcripts of 15 phone conversations from 2014 that prompted the case, Gleeson rejected arguments by ASIC that the calls amounted to “personal advice” provided without proper process or qualifications.
That scuttled the regulator’s position that the bank had breached its banking licence. An ASIC spokesman said the regulator was reviewing the judgement.
Westpac, Australia’s second-biggest bank, had argued its sales team never purported to be offering advice and were only conveying a marketing message.
The bank said it was considering the implications of the judgement in a filing. Earlier, its shares closed down 1 percent, in line with the broader market.
Shares of the lender are at a six-year low, as confidence in Australia’s big banks has been shattered after the public inquiry into the financial sector exposed a culture in which staff were incentivised to mislead customers. ($1 = 1.4075 Australian dollars) (Reporting by Tom Westbrook; Editing by Himani Sarkar)