Australian Securities and Investments Commission v Westpac Banking Corporation (Omnibus)
[2022] FCA 515
•22 April 2022
FEDERAL COURT OF AUSTRALIA
Australian Securities and Investments Commission v Westpac Banking Corporation (Omnibus) [2022] FCA 515
File numbers: VID 704 of 2021
VID 705 of 2021
VID 707 of 2021
NSD 1239 of 2021
NSD 1240 of 2021
NSD 1241 of 2021Judgment of: BEACH J Date of judgment: 22 April 2022 Catchwords: CORPORATIONS – provision of financial services – regulatory proceedings – six proceedings brought by the Australian Securities and Investments Commission – contraventions by Westpac Banking Corporation and its subsidiaries – numerous breaches of the Corporations Act 2001 (Cth) and Australian Securities and Investments Commission Act 2001 (Cth) – dealings with de-registered company accounts and funds held therein – charging of advice fees to accounts of deceased customers – charging of contribution fees with respect to investment or superannuation products without proper disclosure documents – improper provision and charging for duplicate insurance policies to customers – insurance policies issued without consent – false and misleading representations and misleading and deceptive representations concerning the sale to debt purchasers of customers’ debts relating to Westpac-branded cards, Westpac-branded loans and St George-branded cards – improper deduction of insurance fees including commissions – conflicted remuneration – assessment of pecuniary penalties and other relief – financial services laws – breaches of Australian financial services licence – non-compliance with s 912A of the Corporations Act – contraventions of ss 12CB, 12DA, 12DB, 12DI and 12DM of the ASIC Act – contraventions of ss 912A, 962P, 963K and 1041H of the Corporations Act – orders and declarations made in each of the six proceedings Legislation: Corporations Act 2001 (Cth) ss 760A, 761A, 763A, 763B, 763C, 763D, 764A, 765A, 766A, 766B, 766C, 912A, 912B, 962A, 962B, 962C, 962D, 962P, 963A, 963B, 963C, 963F, 963L, 963K, 1041H, 1101B, 1317E, 1317G, 1528
Australian Securities and Investments Commission Act 2001 (Cth) ss 12BA, 12BAA, 12BAB, 12CB, 12CC, 12DA, 12DB, 12DI, 12DM, 12GBA, 12GBB, 12GBCA 12GBCL(b), 12GLA, 322, 327
Cases cited: Australian Building and Construction Commissioner v Pattinson [2022] HCA 13
Australian Competition and Consumer Commission v Cement Australia Pty Ltd (2017) 258 FCR 312
Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd (t/as Bet365 (No 2) [2016] FCA 698
Australian Competition and Consumer Commission v Medibank Private Ltd (2018) 267 FCR 544
Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) (2020) 275 FCR 57
Australian Securities and Investments Commission v Commonwealth Bank of Australia [2020] FCA 790
Australian Securities and Investments Commission v Kobelt (2019) 368 ALR 1
Australian Securities and Investments Commission v Westpac Banking Corporation (No 3) (2018) 131 ACSR 585
Australian Securities and Investments Commission v Westpac Securities Administration Ltd (2019) 272 FCR 170
Commonwealth v Director, Fair Work Building Industry Inspectorate (2015) 258 CLR 482
Stubbings v Jams 2 Pty Ltd [2022] HCA 6
Division: General Division Registry: Victoria National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 567 Date of hearing: 8, 20, 21 and 22 April 2022 VID 704 of 2021 Counsel for the Plaintiff: Mr P H Solomon QC and Ms A M Folie Solicitor for the Plaintiff: Australian Government Solicitor Counsel for the Defendant: Ms K Morgan SC and Ms Z Hillman Solicitor for the Defendant: Allens VID 705 of 2021 Counsel for the Plaintiff: Mr P H Solomon QC, Mr M Hosking and Ms S Hogan Solicitor for the Plaintiff: Australian Government Solicitor Counsel for the Defendant: Dr R Higgins SC and Mr J Hutton Solicitor for the Defendant: Allens VID 707 of 2021 Counsel for the Applicant: Ms R L Enbom QC and Mr D R Luxton Solicitor for the Applicant: Maddocks Lawyers Counsel for the Respondents: Ms K Morgan SC and Ms Z Hillman Solicitor for the Respondents: King & Wood Mallesons NSD 1239 of 2021 Counsel for the Plaintiff: Mr L K Crowley QC and Mr D Healey Solicitor for the Plaintiff: Australian Securities and Investments Commission Counsel for the Defendant: Ms K Morgan SC Solicitor for the Defendant: Gilbert + Tobin NSD 1240 of 2021 Counsel for the Plaintiff: Mr Y Shariff SC and Mr T Kane Solicitor for the Plaintiff: Maddocks Lawyers Counsel for the Defendants: Dr R Higgins SC and Ms A Smith Solicitor for the Defendants: Ashurst NSD 1241 of 2021 Counsel for the Plaintiff: Ms D Hogan-Doran SC, Mr J Hewitt and Ms K Petch Solicitor for the Plaintiff: Australian Government Solicitor Counsel for the Defendant: Mr D F C Thomas SC and Ms A Smith Solicitor for the Defendant: Allens ORDERS
VID 707 of 2021 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Applicant
AND: WESTPAC BANKING CORPORATION (ACN 007 457 141) (and others named in the Schedule)
Respondents
ORDER MADE BY:
BEACH J
DATE OF ORDER:
22 APRIL 2022
THE COURT NOTES THAT:
In these orders, the following definitions apply:
“Advice Licensees” means the first, second and third respondents;
“Affected Members” means customers receiving financial advice from the first, second or third respondents (including through their authorised representatives), and whose accounts were charged advice fees after notification of their death;
“Non-Group Affected Members” means customers receiving financial advice from providers of financial advice outside of the Westpac Group (including through their authorised representatives), and whose accounts were charged advice fees after notification of their death;
“Penalty Period” means 30 November 2015 to 9 October 2019; and
“Post-FOFA customers” means customers first provided advice services after 1 July 2013.
THE COURT DECLARES THAT:
1.Pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA Act), s 1317E of the Corporations Act 2001 (Cth) and s 12GBA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) (as in force at the relevant time), the first respondent (Westpac):
(a)contravened s 12DI(3) of the ASIC Act, on each of the 4,324 occasions during the Penalty Period up to 1 July 2019 that Westpac accepted payment of an advice fee after being notified of the customer’s death, in circumstances where, at the time of acceptance there were reasonable grounds for believing that Westpac would not be able to supply the financial services within a reasonable time or at all;
(b)engaged in unconscionable conduct, in trade or commerce, in connection with the supply of financial services, in contravention of s 12CB(1) of the ASIC Act by charging advice fees during the Penalty Period up to 12 November 2018 to Affected Member accounts after being notified of the customer’s death, for financial advice that could not and was not provided to the customer, and by retaining those fees;
(c)contravened s 962P of the Corporations Act on each of the 1,212 occasions during the Penalty Period up to 1 July 2019 that Westpac received an advice fee from a Post-FOFA customer after being notified of their death;
(d)contravened s 912A(1)(c) of the Corporations Act on each occasion that Westpac contravened ss 12DI(3) or 12CB of the ASIC Act or s 962P of the Corporations Act in breach of its general obligation to comply with the financial services laws;
(e)by its conduct during the Penalty Period up to 12 November 2018, in:
(i)failing to have systems, practices and/or policies capable of preventing the charging of advice fees to Affected Member accounts after notification of a customer’s death; and
(ii)failing to have systems, practices and/or policies providing for the refund of advice fees back to the date of a customer’s death,
breached its obligation to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and thereby contravened s 912A(1)(a) of the Corporations Act.
2.Pursuant to s 21 of the FCA Act and/or s 1317E of the Corporations Act, the second respondent (Securitor):
(a)contravened s 12DI(3) of the ASIC Act, on each of the 3,272 occasions during the Penalty Period up to 1 March 2019 that Securitor accepted payment of an advice fee after being notified of the customer’s death, in circumstances where, at the time of acceptance there were reasonable grounds for believing that Securitor would not be able to supply the financial services within a reasonable time or at all;
(b)engaged in unconscionable conduct, in trade or commerce, in connection with the supply of financial services, in contravention of s 12CB(1) of the ASIC Act by charging advice fees during the Penalty Period up to 19 November 2018 to Affected Member accounts after being notified of the customer’s death, for financial advice that could not and was not provided to the customer, and by retaining those fees;
(c)contravened s 912A(1)(c) of the Corporations Act on each occasion that Securitor contravened ss 12DI(3) or 12CB of the ASIC Act in breach of its general obligation to comply with the financial services laws;
(d)by its conduct during the Penalty Period up to 19 November 2018, in:
(i)failing to have systems, practices and/or policies capable of preventing the charging of advice fees to Affected Member accounts after notification of a customer’s death; and
(ii)failing to have systems, practices and/or policies providing for the refund of advice fees back to the date of a customer’s death,
breached its obligation to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and thereby contravened s 912A(1)(a) of the Corporations Act.
3.Pursuant to s 21 of the FCA Act, s 1317E of the Corporations Act and/or s 12GBA of the ASIC Act (as in force at the relevant time), the third respondent (Magnitude):
(a)contravened s 12DI(3) of the ASIC Act, on each of the 1,214 occasions during the Penalty Period up to 9 October 2019 that Magnitude accepted payment of an advice fee after being notified of the customer’s death, in circumstances where, at the time of acceptance there were reasonable grounds for believing that Magnitude would not be able to supply the financial services within a reasonable time or at all;
(b)engaged in unconscionable conduct, in trade or commerce, in connection with the supply of financial services, in contravention of s 12CB(1) of the ASIC Act by charging advice fees during the Penalty Period up to 19 November 2018 to Affected Member accounts after being notified of the customer’s death, for financial advice that could not and was not provided to the customer, and by retaining those fees;
(c)contravened s 912A(1)(c) of the Corporations Act on each occasion that Magnitude contravened ss 12DI(3) or 12CB of the ASIC Act in breach of its general obligation to comply with the financial services laws;
(d)by its conduct during the Penalty Period up to 19 November 2018, in:
(i)failing to have systems, practices and/or policies capable of preventing the charging of advice fees to Affected Member accounts after notification of a customer’s death; and
(ii)failing to have systems, practices and/or policies providing for the refund of advice fees back to the date of a customer’s death,
breached its obligation to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and thereby contravened s 912A(1)(a) of the Corporations Act.
4.Pursuant to s 21 of the FCA Act and/or s 1317E of the Corporations Act, the fourth respondent (AAML):
(a)was knowingly concerned in a contravention of s 12DI(3) of the ASIC Act on each of the 5 occasions during the Penalty Period up to 10 September 2018 that AAML remitted payment of an advice fee to Westpac, Securitor or Magnitude after being notified of the customer’s death and knowing, at the time of the remittance, that there were reasonable grounds for believing that the Advice Licensee would not be able to supply the financial services within a reasonable time or at all;
(b)contravened s 912A(1)(c) of the Corporations Act on each occasion that AAML was knowingly concerned in a contravention of s 12DI(3) of the ASIC Act in breach of its general obligation to comply with the financial services laws;
(c)by its conduct during the Penalty Period up to 10 September 2018, in failing to have systems, practices and/or policies to cease payment of advice related fees from Affected Member accounts after notification of a customer’s death, breached its obligations to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and thereby contravened s 912A(1)(a) of the Corporations Act.
5.Pursuant to s 21 of the FCA Act and/or s 1317E of the Corporations Act, the fifth respondent (ACML):
(a)was knowingly concerned in a contravention of s 12DI(3) of the ASIC Act on each of the 781 occasions during the Penalty Period up to 10 September 2018 that ACML remitted payment of an advice fee to Westpac, Securitor or Magnitude after being notified of the customer’s death and knowing, at the time of the remittance, that there were reasonable grounds for believing that the Advice Licensee would not be able to supply the financial services within a reasonable time or at all;
(b)contravened s 912A(1)(c) of the Corporations Act on each occasion that ACML was knowingly concerned in a contravention of s 12DI(3) of the ASIC Act in breach of its general obligation to comply with the financial services laws;
(c)by its conduct during the Penalty Period up to 10 September 2018, in failing to have systems, practices and/or policies to cease payment of advice related fees from Affected Member and Non-Group Affected Member accounts after notification of a customer’s death, breached its obligations to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and thereby contravened s 912A(1)(a) of the Corporations Act.
6.Pursuant to s 21 of the FCA Act and/or s 1317E of the Corporations Act, the sixth respondent (BTFM):
(a)was knowingly concerned in a contravention of s 12DI(3) of the ASIC Act on each of the 3,948 occasions during the Penalty Period up to 10 September 2018 that BTFM remitted payment of an advice fee to Westpac, Securitor or Magnitude after being notified of the customer’s death and knowing, at the time of the remittance, that there were reasonable grounds for believing that the Advice Licensee would not be able to supply the financial services within a reasonable time or at all;
(b)contravened s 912A(1)(c) of the Corporations Act on each occasion that BTFM was knowingly concerned in a contravention of s 12DI(3) of the ASIC Act in breach of its general obligation to comply with the financial services laws;
(c)by its conduct during the Penalty Period up to 10 September 2018, in failing to have systems, practices and/or policies to cease payment of advice related fees from Affected Member and Non-Group Affected Member accounts after notification of a customer’s death, breached its obligations to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and thereby contravened s 912A(1)(a) of the Corporations Act.
7.Pursuant to s 21 of the FCA Act and/or s 1317E of the Corporations Act 2001, by its conduct during the Penalty Period up to 10 September 2018, in failing to have systems, practices and/or policies to cease payment of advice related fees from Affected Member and Non-Group Affected Member accounts after notification of a customer’s death, the seventh respondent breached its obligations to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and thereby contravened s 912A(1)(a) of the Corporations Act.
8.Pursuant to s 21 of the FCA Act and/or s 1317E of the Corporations Act, the eighth respondent (BTPS):
(a)was knowingly concerned in a contravention of s 12DI(3) of the ASIC Act on each of the 717 occasions during the Penalty Period up to 10 September 2018 that BTPS remitted payment of an advice fee to Westpac, Securitor or Magnitude after being notified of the customer’s death and knowing, at the time of the remittance, that there were reasonable grounds for believing that the Advice Licensee would not be able to supply the financial services within a reasonable time or at all;
(b)contravened s 912A(1)(c) of the Corporations Act on each occasion that BTPS was knowingly concerned in a contravention of s 12DI(3) of the ASIC Act in breach of its general obligation to comply with the financial services laws;
(c)by its conduct during the Penalty Period up to 10 September 2018, in failing to have systems, practices and/or policies to cease payment of advice related fees to Affected Member and Non-Group Affected Member accounts after notification of a customer’s death, breached its obligations to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and thereby contravened s 912A(1)(a) of the Corporations Act.
AND THE COURT ORDERS THAT:
9.Westpac pay pecuniary penalties to the Commonwealth of Australia:
(a)pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, and s 12GBB of the ASIC Act as in force from 13 March 2019, in respect of its contraventions of s 12DI(3) of the ASIC Act referred to in declaration 1(a) above;
(b)pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, in respect of its contravention of s 12CB(1) of the ASIC Act referred to in declaration 1(b) above;
(c)pursuant to s 1317G(1E)(b)(iv) of the Corporations Act as in force until 12 March 2019, and section 1317G(4) of the Corporations Act as in force from 13 March 2019, in respect of its contraventions of s 962P of the Corporations Act referred to in declaration 1(c) above,
in the aggregate amount of $15,950,000.
10.Securitor pay pecuniary penalties to the Commonwealth of Australia:
(a)pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, in respect of its contraventions of s 12DI(3) of the ASIC Act referred to in declaration 2(a) above;
(b)pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, in respect of its contravention of s 12CB(1) of the ASIC Act referred to in declaration 2(b) above,
in the aggregate amount of $7,600,000.
11.Magnitude pay pecuniary penalties to the Commonwealth of Australia:
(a)pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, and s 12GBB of the ASIC Act as in force from 13 March 2019, in respect of its contraventions of s 12DI(3) of the ASIC Act referred to in declaration 3(a) above;
(b)pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, in respect of its contravention of s 12CB(1) of the ASIC Act referred to in declaration 3(b) above,
in the aggregate amount of $4,450,000.
12.AAML pay pecuniary penalties to the Commonwealth of Australia pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, in respect of its knowing involvement in contraventions of s 12DI(3) of the ASIC Act referred to in declaration 4(a) above, in the aggregate amount of $100,000.
13.ACML pay pecuniary penalties to the Commonwealth of Australia pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, in respect of its knowing involvement in contraventions of s 12DI(3) of the ASIC Act referred to in declaration 5(a) above, in the aggregate amount of $1,800,000.
14.BTFM pay pecuniary penalties to the Commonwealth of Australia pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, in respect of its knowing involvement in contraventions of s 12DI(3) of the ASIC Act referred to in declaration 6(a) above, in the aggregate amount of $7,200,000.
15.BTPS pay pecuniary penalties to the Commonwealth of Australia pursuant to s 12GBA(1) of the ASIC Act as in force until 12 March 2019, in respect of its knowing involvement in contraventions of s 12DI(3) of the ASIC Act referred to in declaration 8(a) above, in the aggregate amount of $2,900,000.
16.The respondents pay the applicant’s costs of and incidental to the proceeding.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1240 of 2021 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: WESTPAC BANKING CORPORATION
First Defendant
MAGNITUDE GROUP PTY LIMITED (ACN 086 266 202)
Second Defendant
SECURITOR FINANCIAL GROUP PTY LIMITED (ACN 009 189 495)
Third Defendant
ORDER MADE BY:
BEACH J
DATE OF ORDER:
22 APRIL 2022
THE COURT NOTES THAT:
In these orders, the following definitions apply.
“Contribution Fees”:
(a)is a reference to a fee charged to a retail client by reference to the amounts contributed by or on behalf of that client to their investment or superannuation products, being fees which are described within the Defendants’ businesses using a number of descriptors including “contribution fees”, “adviser contribution fees”, “additional deposit fees”, and “regular savings fees”;
(b)includes such fees charged on regular contributions into the investment or superannuation products made by clients or their employer (e.g. such as Super Guarantee contributions from an employer) (Regular Contribution Fees), and also includes such fees charged on irregular contributions into the investment or superannuation products made by clients (Ad Hoc Contribution Fees); and
(c)excludes the “initial” contribution fees charged to a client on the initial transfer of a lump sum of funds into a superannuation or investment product in order to give effect to the personal financial produce advice provided to that client, for the provision and/or implementation of that advice.
“Penalty Period” means 13 March 2019 to 30 June 2019 in the case of the first defendant and to 30 September 2019 in the case of the second and third defendants.
THE COURT DECLARES THAT:
1.Pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and/or s 1317E of the Corporations Act 2001 (Cth), during the Penalty Period, the first defendant (Westpac) contravened ss 912A(1)(a) and (5A) of the Corporations Act by failing to do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly, in that during the said period:
(a)a significant number of retail clients (BT Financial Advice Clients) (with the exact number of clients affected presently unknown to Westpac) were charged Ad Hoc Contribution Fees and Regular Contribution Fees for the benefit of Westpac and its employee advisers in circumstances where:
(i)those fees were being charged in the Penalty Period without having been disclosed in Statements of Advice and/or Records of Advice (Disclosure Documents), or without having been adequately disclosed in Disclosure Documents (in that in respect of these clients the amount and/or basis upon which the fees would be charged had not been identified in adequate or precise terms and/or with adequate information given as to the fees); and
(ii)Westpac admits that given the absence of disclosure or absence of adequate disclosure, those fees ought not to have been charged.
(b)in the instances described in subparagraph (a) above:
(i)the Ad Hoc and Regular Contribution Fees were charged to the BT Financial Advice Clients by deducting those fees from the superannuation and investment accounts of those clients whenever those clients made contributions to those accounts, in circumstances where Westpac admits that it ought not to have charged those fees;
(ii)Westpac (and/or its financial adviser employees) received and retained the Ad Hoc Contribution Fees and Regular Contribution Fees that were charged and deducted from the superannuation and investment accounts of those clients, in circumstances where Westpac admits that it ought not to have charged those fees;
(c)Westpac did not maintain systems and processes which:
(i)in the Penalty Period, ensured that Ad Hoc and Regular Contribution Fees to be charged to BT Financial Advice Clients were disclosed to them in Disclosure Documents;
(ii)in the Penalty Period, ensured that Ad Hoc and Regular Contribution Fees were not charged to BT Financial Advice Clients, in circumstances where those fees ought not to have been charged;
(iii)in the Penalty Period, ensured that Westpac and/or its financial advisers did not receive or retain Ad Hoc and Regular Contribution Fees for their benefit, in circumstances where those fees ought not to have been received and retained;
(iv)in the Penalty Period, in instances where there was a failure to disclose Ad Hoc and Regular Contribution Fees, provided to BT Financial Advice Clients information about the fees, in order to allow such clients to make an informed decision as to whether to agree to the deduction of those fees from their superannuation or investment account;
(v)in the Penalty Period, retained adequate records of Disclosure Documents (or their contents) to enable the ready identification of what Ad Hoc and Regular Contribution Fees had been disclosed to BT Financial Advice Clients in their Disclosure Documents;
(vi)in the Penalty Period, adequately trained staff as to the requirements to accurately disclose fees such as Contribution Fees to their BT Financial Advice Clients; and
(vii)in the Penalty Period, were capable of ensuring that the application and fee loading processes used by financial advisers in implementing the personal financial product advice accurately reflected the terms of Disclosure Documents.
2.Pursuant to s 21 of the FCA Act and/or s 1317E of the Corporations Act, during the Penalty Period, the second defendant (Magnitude), being a wholly owned subsidiary of Westpac and operating as part of a business known as BT Group Licensees, contravened ss 912A(1)(a) and (5A) of the Corporations Act by failing to do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly, in that during the said period:
(a)a significant number of retail clients (the Magnitude Clients) (with the exact number of clients affected presently unknown to Magnitude) were charged Ad Hoc Contribution Fees and Regular Contribution Fees for the benefit of Magnitude and its Authorised Representatives in circumstances where:
(i)those fees were being charged in the Penalty Period without having been disclosed in Disclosure Documents, or without having been adequately disclosed in Disclosure Documents (in that in respect of these clients the amount and/or basis upon which the fees would be charged had not been identified in adequate or precise terms and/or with adequate information given as to the fees); and
(ii)Magnitude admits that given the absence of disclosure or absence of adequate disclosure, those fees ought not to have been charged.
(b)in the instances described in subparagraph (a) above:
(i)the Ad Hoc and Regular Contribution Fees were charged to the Magnitude Clients by deducting those fees from the superannuation and investment accounts of those clients whenever those clients made contributions to those accounts, in circumstances where Magnitude admits that it ought not to have charged those fees;
(ii)Magnitude and/or Magnitude’s Authorised Representatives received and retained the Ad Hoc Contribution Fees and Regular Contribution Fees that were charged and deducted from the superannuation and investment accounts of those clients, in circumstances where Magnitude admits that it ought not to have charged those fees;
(c)Magnitude did not maintain systems and processes which:
(i)in the Penalty Period, ensured that Ad Hoc and Regular Contribution Fees to be charged to Magnitude Clients were disclosed to them in Disclosure Documents;
(ii)in the Penalty Period, ensured that Ad Hoc and Regular Contribution Fees were not charged to Magnitude Clients, in circumstances where those fees ought not to have been charged;
(iii)in the Penalty Period, ensured that Magnitude and/or Magnitude’s Authorised Representatives did not receive or retain Ad Hoc and Regular Contribution Fees for their benefit, in circumstances where those fees ought not to have been received and retained;
(iv)in the Penalty Period, in instances where there was a failure to disclose Ad Hoc and Regular Contribution Fees, provided to Magnitude Clients information about the fees, in order to allow such clients to make an informed decision as to whether to agree to the deduction of those fees from their superannuation or investment account;
(v)in the Penalty Period, retained adequate records of Disclosure Documents (or their contents) to enable the ready identification of what Ad Hoc and Regular Contribution Fees had been disclosed to Magnitude Clients in their Disclosure Documents;
(vi)in the Penalty Period, adequately trained staff as to the requirements to accurately disclose fees such as Contribution Fees to the Magnitude Clients; and
(vii)in the Penalty Period, were capable of ensuring that the application and fee loading processes used by financial advisers in implementing the personal financial product advice accurately reflected the terms of Disclosure Documents.
3.Pursuant to s 21 of the FCA Act and/or s 1317E of the Corporations Act, during the Penalty Period the third defendant (Securitor), being a wholly owned subsidiary of Westpac and operating as part of a business known as BT Group Licensees, contravened ss 912A(1)(a) and (5A) of the Corporations Act by failing to do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly, in that during the said period:
(a)a significant number of retail clients (the Securitor Clients) (with the exact number of clients affected presently unknown to Securitor) were charged Ad Hoc Contribution Fees and Regular Contribution Fees for the benefit of Securitor and its Authorised Representatives in circumstances where:
(i)those fees were being charged in the Penalty Period without having been disclosed in Disclosure Documents, or without having been adequately disclosed in Disclosure Documents (in that in respect of these clients the amount and/or basis upon which the fees would be charged had not been identified in adequate or precise terms and/or with adequate information given as to the fees); and
(ii)Securitor admits that given the absence of disclosure or absence of adequate disclosure, those fees ought not to have been charged.
(b)in the instances described in subparagraph (a) above:
(i)the Ad Hoc and Regular Contribution Fees were charged to the Securitor Clients by deducting those fees from the superannuation and investment accounts of those clients whenever those clients made contributions to those accounts, in circumstances where Securitor admits that it ought not to have charged those fees;
(ii)Securitor’s and/or Securitor’s Authorised Representatives received and retained the Ad Hoc Contribution Fees and Regular Contribution Fees that were charged and deducted from the superannuation and investment accounts of those clients, in circumstances where Securitor admits that it ought not to have charged those fees;
(c)Securitor did not maintain systems and processes which:
(i)in the Penalty Period, ensured that Ad Hoc and Regular Contribution Fees to be charged to Securitor Clients were disclosed to them in Disclosure Documents;
(ii)in the Penalty Period, ensured that Ad Hoc and Regular Contribution Fees were not charged to Securitor Clients, in circumstances where those fees ought not to have been charged;
(iii)in the Penalty Period, ensured that Securitor and/or Securitor’s Authorised Representatives did not receive or retain Ad Hoc and Regular Contribution Fees for their benefit, in circumstances where those fees ought not to have been received and retained;
(iv)in the Penalty Period, in instances where there was a failure to disclose Ad Hoc and Regular Contribution Fees, provided to Securitor Clients information about the fees, in order to allow such clients to make an informed decision as to whether to agree to the deduction of those fees from their superannuation or investment account;
(v)in the Penalty Period, retained adequate records of Disclosure Documents (or their contents) to enable the ready identification of what Ad Hoc and Regular Contribution Fees had been disclosed to Securitor Clients in their Disclosure Documents;
(vi)in the Penalty Period, adequately trained staff as to the requirements to accurately disclose fees such as Contribution Fees to the Securitor Clients; and
(vii)in the Penalty Period, were capable of ensuring that the application and fee loading processes used by financial advisers in implementing the personal financial product advice accurately reflected the terms of Disclosure Documents.
AND THE COURT ORDERS THAT:
4.Pursuant to s 1317G(1)(a) of the Corporations Act, Westpac pay a pecuniary penalty to the Commonwealth in respect of Westpac’s contraventions of ss 912A(1)(a) and (5A) referred to in declaration 1 above, in the amount of $2 million.
5.Pursuant to s 1317G(1)(a) of the Corporations Act, Magnitude pay a pecuniary penalty to the Commonwealth in respect of Magnitude’s contraventions of ss 912A(1)(a) and (5A) referred to in declaration 2 above, in the amount of $2 million.
6.Pursuant to s 1317G(1)(a) of the Corporations Act, Securitor pay a pecuniary penalty to the Commonwealth in respect of Securitor’s contraventions of ss 912A(1)(a) and (5A), referred to in declaration 3 above, in the amount of $2 million.
7.The defendants pay the plaintiff’s costs of and incidental to this proceeding.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1241 of 2021 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: WESTPAC BANKING CORPORATION (ACN 007 457 141)
Defendant
ORDER MADE BY:
BEACH J
DATE OF ORDER:
21 APRIL 2022
THE COURT DECLARES THAT:
Duplicate Policies
1.Westpac Banking Corporation (WBC) contravened each of ss 12DB(1)(b), (h) and (i) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) in relation to each of the customers identified in Part A of Schedule 1 to the Statement of Agreed Facts and Admissions filed 29 November 2021 (DP Customers), during the period 30 November 2015 to 30 June 2021 (Relevant Period), by reason of the following:
(a)WBC caused Westpac General Insurance Limited ACN 003 719 319 (WGIL) to issue to each of the DP Customers, a home and contents insurance policy or landlord insurance policy (Policy), in circumstances where the DP Customer already held a Policy in respect of the same ‘risk address’ (together, Duplicate Policies);
(b)Duplicate Policies were issued to each DP Customer in the following circumstances:
(i)the DP Customer requested a change (Change) to their Policy (Original Policy);
(ii)due to system limitations, the Change required a new Policy to be created (New Policy);
(iii)this gave rise to the need for a cancellation request to be made for the Original Policy by WBC’s representative;
(iv)the cancellation request for the Original Policy was not made by WBC’s representative; and
(v)as a result, Duplicate Policies remained in effect - the Original Policy, being the Policy to be cancelled, and the New Policy, which was the Policy that the Customer agreed to be issued and in place from the time of the Change;
(c)after the Change, WBC collected premiums for an overlapping period in respect of both Policies, and in respect of the DP Customers, sent annual renewal documents in respect of the Original Policy;
(d)during the course of the conduct referred to in (b) and (c) above, in trade or commerce, and in connection with the supply of the financial services covered by its Australian financial services licence number 2337149 (the Services), WBC represented to each DP Customer (the DP Representations) that:
(i)WBC had arranged or would arrange for the cancellation of the Original Policy, which was a representation concerning the existence of a right, within the meaning of s 12DB(1)(i) of the ASIC Act;
(ii)the DP Customer had agreed to continue to acquire services provided by the Original Policy, within the meaning of s 12DB(1)(b) of the ASIC Act;
(iii)the DP Customer had a continuing need for the Original Policy upon the issuance of the New Policy, which was a representation within the meaning of s 12DB(1)(h) of the ASIC Act;
(iv)the DP Customer was liable to pay the premiums for the Original Policy and that WBC and/or WGIL had a continuing right to collect amounts for premiums in respect of the Original Policy, which were representations concerning the existence of a right, within the meaning of s 12DB(1)(i) of the ASIC Act; and
(e)the DP Representations were false or misleading because:
(i)WBC did not arrange for the cancellation of the Original Policy;
(ii)each DP Customer had not agreed to the Original Policy continuing from the time of the Change;
(iii)the DP Customer did not have a need for the Original Policy upon the issuance of the New Policy; and
(iv)WBC did not have a right to collect the premiums for the Original Policy from the time of the Change.
2.WBC contravened s 12DA(1) of the ASIC Act and s 1041H(1) of the Corporations Act 2001 (Cth), during the Relevant Period, by reason of the matters set out in Declaration 1 above, in that WBC engaged in conduct, in this jurisdiction, that was misleading or deceptive or likely to mislead or deceive.
3.WBC contravened ss 912A(1)(a) and 912A(5A) of the Corporations Act between 13 March 2019 to 24 May 2021, by failing to do all things necessary to ensure that the Services were provided efficiently, honestly and fairly, in that WBC failed to have in place adequate:
(a)risk management procedures the objectives of which were to detect breaches of the “financial services laws” (as defined in the Corporations Act) in relation to the issuance of Duplicate Policies (the DP Detective Controls);
(b)risk management procedures the objectives of which were to prevent breaches of the financial services laws in relation to the issuance of Duplicate Policies (the DP Preventative Controls); and
(c)risk management procedures the objectives of which were to monitor the success or otherwise of the DP Detective Controls and DP Preventative Controls (the DP Monitoring Controls).
4.WBC contravened ss 912A(1)(ca) and 912A(5A) of the Corporations Act between 13 March 2019 to 24 May 2021, by reason of the matters set out in Declaration 3 above, in that WBC failed to take reasonable steps to ensure that its representatives complied with the financial services laws.
5.WBC contravened s 912A(1)(a) of the Corporations Act during the Relevant Period prior to 13 March 2019, by failing to do all things necessary to ensure that the Services were provided efficiently, honestly and fairly, in that WBC failed to have in place adequate DP Detective Controls, DP Preventative Controls and DP Monitoring Controls.
6.WBC contravened s 912A(1)(ca) of the Corporations Act during the Relevant Period prior to 13 March 2019, by reason of the matters set out in Declaration 5 above, in that WBC failed to take reasonable steps to ensure that its representatives complied with the financial services laws.
7.WBC contravened s 912A(1)(c) of the Corporations Act during the Relevant Period, by reason of the matters set out in Declarations 1 to 6 above, in that WBC failed to comply with the financial services laws.
Policies Issued Without Consent
8.During the Relevant Period:
(a)WBC caused WGIL to issue to each of the customers identified in Part B of Schedule 1 to the said Statement of Agreed Facts and Admissions (the Non-Consent Customers), the Policies identified in Part B of Schedule 1 (the Non-Consent Policies) in circumstances where the Non-Consent Customer did not consent to the issuance of the Non-Consent Policy relevant to that customer;
(b)after the Non-Consent Policy was issued, WBC sent to each of the Non-Consent Customers a pack of documents (the New Business Welcome Pack) which:
(i)informed the Non-Consent Customer that he or she had been issued with a Policy;
(ii)included statements regarding the premium that would be payable by the customer (to WBC for its own benefit and on behalf of WGIL) on either a monthly or annual basis;
(c)during the course of the conduct referred to in (a) and (b) above, in trade or commerce, and in connection with the Services, WBC represented to each Non-Consent Customer (the Non-Consent Representations) that:
(i)the Non-Consent Customer had agreed to acquire the services provided by the Non-Consent Policy, within the meaning of s 12DB(1)(b) of the ASIC Act;
(ii)the Non-Consent Customer was liable to pay the premiums for the Non-Consent Policy set out in the New Business Welcome Pack and that WBC had a continuing right to be paid amounts for premiums in respect of the Non-Consent Policy set out in the New Business Welcome Pack, which were representations concerning the existence of a right, within the meaning of s 12DB(1)(i) of the ASIC Act;
(d)the Non-Consent Representations were false or misleading because:
(i)the Non-Consent Customers did not agree to the Non-Consent Policy being issued;
(ii)WBC was not entitled to be paid the amount of premium set out in the New Business Welcome Pack for the Non-Consent Policies; and
(e)by reason of (a), (b), (c) and (d) above, in respect of each of the Non-Consent Customers, WBC contravened each of ss 12DB(1)(b) and (i) of the ASIC Act.
9.During the Relevant Period, by reason of the matters set out in Declaration 8 above, WBC engaged in conduct, in this jurisdiction, that was misleading or deceptive or likely to mislead or deceive, and thereby contravened s 12DA(1) of the ASIC Act and s 1041H(1) of the Corporations Act.
10.During the Relevant Period, by reason of the matters set out in Declaration 8 above, WBC in trade or commerce asserted on one or more occasions to Non-Consent Customers a right to payment from another person for unsolicited financial services, and by each such assertion contravened s 12DM(1) of the ASIC Act.
11.During the Relevant Period, by reason of the matters set out in Declarations 8 to 10 above, WBC failed to comply with the financial services laws, and thereby contravened s 912A(1)(c) of the Corporations Act.
AND THE COURT ORDERS THAT:
Pecuniary Penalties
12.Pursuant to ss 12GBA (as in force before 13 March 2019) and s 12GBB (as in force on and from 13 March 2019) of the ASIC Act, WBC pay to the Commonwealth of Australia pecuniary penalties in an amount of $13 million in respect of its contraventions of ss 12DB(1)(b), (h) and (i) and 12DM(1) of the ASIC Act referred to in Declarations 1, 8, and 10.
13.Pursuant to s 1317G of the Corporations Act, WBC pay to the Commonwealth of Australia pecuniary penalties in an amount of $2 million in respect of its contraventions of s 912A(5A) of the Corporations Act referred to in Declarations 3 and 4.
Compliance Programme
14.Pursuant to s 1101B(1) of the Corporations Act and s 12GLA(1) of the ASIC Act, WBC is required at its expense to:
(a)within 1 month of the date of this order, engage an independent expert with expertise in regulatory compliance, the identity of whom is to be agreed between the parties, or in the absence of agreement, as proposed by the parties and determined by the Court;
(b)instruct the expert to:
(i)review WBC’s arrangements for ensuring that it complies with ss 912A and 1041H of the Corporations Act and ss 12DA, 12DB and 12DM of the ASIC Act in relation to dealing in home and contents insurance policies and landlord insurance policies;
(ii)prepare a written report which:
A.describes his or her expertise and confirms his or her independence;
B.identifies any aspects of the arrangements referred to in sub-paragraph (i) above that, in the opinion of the expert, is not appropriate or adequate to cause WBC to comply with ss 912A and 1041H of the Corporations Act and ss 12DA, 12DB and s 12DM of the ASIC Act in the future; and
C.provides recommendations to WBC to remedy any aspects of WBC’s arrangements of the kind described in sub-paragraph B above identified in the course of the expert’s review;
(c)within 7 months of the date of this order, provide to ASIC a copy of the report referred to in sub-paragraph (b)(ii) above which has been signed by the expert;
(d)within 13 months of the date of this order, provide to ASIC a written report signed by the expert and a Group Executive of WBC which:
(i)annexes a copy of the report referred to in sub-paragraph (b)(ii) above;
(ii)states what steps WBC has taken to give effect to the expert’s recommendations;
(iii)annexes a copy of all internal documents that have been amended as a consequence of the expert’s recommendations; and
(iv)identifies any of the expert’s recommendations not given effect to by WBC, and the reasons why WBC did not give effect to those recommendations.
Other orders
15.Pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth), WBC pay ASIC’s costs of the proceedings.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
NSD 1239 of 2021 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: WESTPAC BANKING CORPORATION (ACN 007 457 141)
Defendant
ORDER MADE BY:
BEACH J
DATE OF ORDER:
21 APRIL 2022
DEFINITIONS
In these orders:
(i)ASIC Act means the Australian Securities and Investments Commission Act 2001 (Cth).
(ii)Corporations Act means the Corporations Act 2001 (Cth).
(iii)Debt Purchaser means Baycorp Collections PDL (Australia) Pty Limited (ACN 119 478 778), Credit Corp Services Pty Ltd (ACN 082 928 872), Panthera Finance Pty Ltd (ACN 147 634 482), ACM Group Pty Limited (ACN 127 181 097), Credit Corp Acceptance Pty Limited (ACN 119 211 317) (then known as Great Western Asset Management Pty Ltd), Lion Finance Pty Ltd (ACN 095 926 766), and/or Pioneer Credit Solutions Pty Ltd (ACN 136 062 970).
(iv)FCA Act means the Federal Court of Australia Act 1976 (Cth).
(v)St George-branded cards means St George-branded consumer credit cards, Bank SA-branded consumer credit cards and Bank of Melbourne-branded consumer credit cards.
(vi)Westpac-branded cards means Westpac-branded consumer credit cards.
(vii)Westpac-branded loans means Westpac-branded Flexi Loans.
THE COURT DECLARES THAT:
Westpac-branded cards
1.Between 17 March 2011 and 30 November 2015, the Defendant (Westpac):
(a)in trade and commerce and in connection with the supply of financial services, on 709 occasions represented to a Debt Purchaser that one or more interest rates applied to a customer’s corresponding Westpac-branded card account balance and that no other interest rates applied to the customer's account, when in fact the interest rate or rates that Westpac (and then the Debt Purchaser) was entitled to charge the customer on either a portion of the account balance, or the whole of the account balance, was lower than the lowest interest rate that Westpac provided to the Debt Purchaser; and
(b)thereby, on each occasion, in contravention of ss 12DB(1)(a) and (i) of the ASIC Act, Westpac made false and misleading representations, and in contravention of s 12DA(1) of the ASIC Act, made misleading and deceptive representations.
2.Between 1 December 2015 and 10 May 2018, Westpac:
(a)in trade and commerce and in connection with the supply of financial services, on 3,477 occasions represented to a Debt Purchaser that one or more interest rates applied to a customer’s corresponding Westpac-branded card account balance and that no other interest rates applied to the customer's account, when in fact the interest rate or rates that Westpac (and then the Debt Purchaser) was entitled to charge the customer on either a portion of the account balance, or the whole of the account balance, was lower than the lowest interest rate that Westpac provided to the Debt Purchaser; and
(b)thereby, on each occasion, in contravention of ss 12DB(1)(a) and (i) of the ASIC Act, Westpac made false and misleading representations, and in contravention of s 12DA(1) of the ASIC Act, made misleading and deceptive representations.
3.Between 17 March 2011 and 10 May 2018, by reason of the conduct described in the declarations in paragraphs 1 and 2 above, Westpac failed to comply with financial services laws in contravention of s 912A(1)(c) of the Corporations Act.
Westpac-branded loans
4.Between 10 October 2013 and 30 November 2015, Westpac:
(a)in trade and commerce and in connection with the supply of financial services, on 28 occasions represented to a Debt Purchaser that an interest rate applied to the customer’s Westpac-branded loan account balance and that no other interest rates applied to the customer's account, when in fact the interest rate that Westpac (and then the Debt Purchaser) was entitled to charge on the whole of the account balance was lower than the interest rate that Westpac provided to the Debt Purchaser; and
(b)thereby on each occasion, in contravention of ss 12DB(1)(a) and (i) of the ASIC Act, made false and misleading representations; and, in contravention of s 12DA(1) of the ASIC Act, made misleading and deceptive representations.
5.Between 1 December 2015 and 10 May 2018, Westpac:
(a)in trade and commerce and in connection with the supply of financial services, on 162 occasions represented to a Debt Purchaser that an interest rate applied to the customer’s Westpac-branded loan account balance and that no other interest rates applied to the customer’s account, when in fact the interest rate that Westpac (and then the Debt Purchaser) was entitled to charge on the whole of the account balance was lower than the interest rate that Westpac provided to the Debt Purchaser; and
(b)thereby on each occasion, in contravention of ss 12DB(1)(a) and (i) of the ASIC Act, made false and misleading representations; and in contravention of s 12DA(1) of the ASIC Act, made misleading and deceptive representations.
6.Between 1 October 2013 and 10 May 2018, by reason of the conduct described in the declarations in paragraphs 4 and 5 above, Westpac breached its obligation to comply with financial services laws in contravention of s 912A(1)(c) of the Corporations Act.
St George-branded cards
7.Between 1 March 2010 and 30 November 2015, Westpac, in trade and commerce and in connection with the supply of financial services, represented to a Debt Purchaser that one single interest rate applied to a customer's St George-branded card account balance and that no other interest rates applied to the customer’s account, when in fact:
(a)on 450 occasions, the interest rate that Westpac (and then the Debt Purchaser) was entitled to charge on the whole of the account balance was lower than the single interest rate that Westpac provided to the Debt Purchaser; and
(b)on 6,840 occasions, two or more interest rates applied to different parts of the customer’s account balance and the interest rate that Westpac (and then the Debt Purchaser) was entitled to charge the customer on a part of the account balance was lower than the single interest rate that Westpac provided to the Debt Purchaser,
thereby on each occasion, in contravention of ss 12DB(1)(a) and 12DB(1)(g) (from 10 March 2010 to 31 December 2010) and 12DB(1)(i) (from 1 January 2011) of the ASIC Act, made false and misleading representations; and in contravention of s 12DA(1) of the ASIC Act, made misleading and deceptive representations.
8.Between 1 December 2015 and 19 March 2018, Westpac, in trade and commerce and in connection with the supply of financial services, represented to a Debt Purchaser that one single interest rate applied to a customer’s St George-branded card account balance and that no other interest rate applied to the customer’s account, when in fact:
(a)on 532 occasions, the interest rate that Westpac (and then the Debt Purchaser) was entitled to charge on the whole of the account balance was lower than the single interest rate that Westpac provided to the Debt Purchaser; and
(b)on 4,337 occasions, two or more interest rates applied to different parts of the customer’s account balance and the interest rate that Westpac (and then the Debt Purchaser) was entitled to charge the customer on a part of the account balance was lower than the single interest rate that Westpac provided to the Debt Purchaser,
thereby on each occasion, in contravention of ss 12DB(1)(a) and 12DB(1)(i) of the ASIC Act, made false and misleading representations; and in contravention of s 12DA(1) of the ASIC Act, made misleading and deceptive representations.
9.Between 1 March 2010 and 19 March 2018, by reason of the conduct described in the declarations in paragraphs 7 and 8 above, Westpac breached its obligation to comply with financial services laws in contravention of s 912A(1)(c) of the Corporations Act.
AND THE COURT ORDERS THAT:
10.Pursuant to s 12GBA and s 12GBC of the ASIC Act (as in force prior to 13 March 2019) that, within 14 days of the date of this order, Westpac pay to the Commonwealth of Australia a pecuniary penalty in the sum of $12,000,000 in respect of Westpac’s declared contraventions set out in paragraphs 2, 5 and 8 above.
11.Westpac pay the Plaintiff’s costs of and incidental to these proceedings.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
VID 704 of 2021 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: WESTPAC BANKING CORPORATION (ACN 007 457 141)
Defendant
ORDER MADE BY:
BEACH J
DATE OF ORDER:
20 APRIL 2022
THE COURT DECLARES THAT:
1.Pursuant to s 21 of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and s 1317E of the Corporations Act 2001 (Cth) (Corporations Act), Westpac Banking Corporation (Westpac) breached its obligation to do all things necessary to ensure the financial services covered by its financial services licence were provided efficiently, honestly and fairly, and thereby contravened ss 912A(1)(a) and 912A(5A) of the Corporations Act, in that:
1.1.On and after 13 March 2019, Westpac knew that it did not have processes or controls in place:
1.1.1.to identify when a company holding a bank account with Westpac had been deregistered under the Corporations Act; or
1.1.2.to manage on an ongoing basis Westpac bank accounts held in the name of deregistered companies (Deregistered Company Accounts) in a manner consistent with funds in those accounts having vested in ASIC or the Commonwealth pursuant to s 601AD of the Corporations Act.
1.2.Despite this knowledge:
1.2.1.Westpac did not implement within its Westpac Institutional Bank division ongoing processes or controls to identify and manage Deregistered Company Accounts until, at the earliest, October 2019;
1.2.2.for all other divisions within Westpac:
1.2.2.1.Westpac did not commence implementation of manual processes to identify and manage Deregistered Company Accounts until 27 October 2020;
1.2.2.2.Westpac did not approve or provide adequate funding or resources to implement ongoing processes or controls to identify and manage Deregistered Company Accounts until October 2020; and
1.2.2.3.Westpac did not implement ongoing processes or controls to identify and manage Deregistered Company Accounts until, at the earliest, 25 March 2021.
1.3.Further, between 13 March 2019 and 27 October 2020:
1.3.1.Westpac did not place any blocks on withdrawals from approximately 4200 Deregistered Company Accounts which Westpac had identified in that period;
1.3.2.Westpac staff removed withdrawal blocks from approximately 100 Deregistered Company Accounts which Westpac had previously identified; and
1.3.3.Westpac did not have controls or adequate systems in place to prevent staff from removing blocks on withdrawals from Deregistered Company Accounts which had been identified and blocked.
1.4.Further:
1.4.1.at all times after August 2019, Westpac knew that Deregistered Company Accounts for companies which had been deregistered before April 2017 remained open;
1.4.2.however, Westpac did not take steps to manage or remediate those historical Deregistered Company Accounts, which totalled approximately 11,000 accounts, until, at the earliest, 25 March 2021.
1.5.By the above conduct in paragraphs 1.2 to 1.4, approximately 21,000 Deregistered Company Accounts held with Westpac (both accounts identified and not identified by Westpac), remained open or were reopened, and transactions could be carried out on those accounts, which included funds from those accounts being received by persons authorised by Westpac to operate the accounts and third parties, in circumstances where those funds in fact vested in ASIC or the Commonwealth.
1.6.In respect of the Deregistered Company Accounts in paragraph 1.5, Westpac:
1.6.1.received payment of fees, interest, overdraft and loan repayments from funds held in the Deregistered Company Accounts (both accounts identified and not identified by Westpac) and made use of the funds in those accounts in the course of its business, in circumstances where the funds had vested in ASIC or the Commonwealth; and
1.6.2.did not remit to ASIC or the Commonwealth funds from those accounts which had vested in ASIC or the Commonwealth. The total vested funds that could be, and in some instances were, withdrawn and / or paid to third parties on the instructions of persons who had previously been authorised by the now deregistered company to operate the accounts rather than remitted to ASIC or the Commonwealth, is estimated at a total of:
1.6.2.1.in respect of deregistered companies which remained deregistered:
1.6.2.1.1.approximately $35.5 million calculated at the date that the company was deregistered; and
1.6.2.1.2.approximately $44.2 million calculated at the date that the company was identified by Westpac as deregistered; and
1.6.2.2.approximately $41 million in respect of companies that were subsequently reinstated or are in the process of being reinstated.
1.7.Despite having previously told ASIC that it was implementing an ongoing control or process to deal with Deregistered Company Accounts, at all times on and after 13 March 2019 until November 2020, Westpac did not tell ASIC that it had not implemented an ongoing control or process across its divisions.
AND THE COURT ORDERS THAT:
2.Pursuant to s 1317G of the Corporations Act, within 30 days of the date of this Order, Westpac pay to the Commonwealth of Australia a pecuniary penalty in the sum of $20 million in respect of Westpac’s conduct declared to be a contravention of s 912A(5A) of the Corporations Act.
3.Westpac pay ASIC’s costs of and incidental to the proceeding.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ORDERS
VID 705 of 2021 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Plaintiff
AND: BT FUNDS MANAGEMENT LTD (ACN 002 916 458)
Defendant
ORDER MADE BY:
BEACH J
DATE OF ORDER:
8 APRIL 2022
THE COURT DECLARES THAT:
1.The defendant contravened ss 12DA(1) and 12DB(1) of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act) and s 1041H(1) of the Corporations Act 2001 (Cth) (Corporations Act):
(a)during the period from 30 November 2015 to 21 September 2020 in respect of members of the Asgard Fund who held insurance cover under the Asgard Employee Super Account policies held by the defendant in its capacity as the trustee of the Asgard Fund (AESA policies); and
(b)during the period from 30 November 2015 to 4 December 2020 in respect of members of the Asgard Fund who held insurance cover under the Asgard Personal Protection Plan policies held by the defendant in its capacity as the trustee of the Asgard Fund (APPP policies),
by representing that insurance fees had been properly deducted from the accounts of members who obtained insurance cover under the AESA policies on or after 22 October 2013, or who obtained insurance cover under the APPP policies on or after 1 July 2014, when in fact the insurance fees that were deducted included commissions that were not permitted to be deducted from the member’s account.
2.The defendant contravened ss 12DA(1) and 12DB(1) of the ASIC Act and s 1041H(1) of the Corporations Act:
(a)during the period from 30 November 2015 to 21 December 2020 in respect of members of the Asgard Fund who held insurance cover under the AESA policies; and
(b)during the period from 30 November 2015 to 25 August 2021 in respect of members of the Asgard Fund who held insurance cover under the APPP policies,
by representing that insurance fees had been deducted as permitted or required from the accounts of members:
(c)who obtained insurance cover under the AESA or APPP policies before 1 July 2013; and
(d)in respect of whom, after 1 July 2013, the arrangement pursuant to which insurance commissions were paid to a financial adviser was terminated,
when, in fact, following the termination of the arrangement, the insurance fees that were deducted included commissions that were not permitted or were not required to be deducted from the member’s account.
3.The defendant contravened ss 12DA(1) and 12DB(1) of the ASIC Act and s 1041H(1) of the Corporations Act during the period from 30 November 2015 to 22 June 2020 in respect of members of the Asgard Fund who:
(a)held insurance cover under the master policies; and
(b)returned a “request to remove a financial adviser from an account” form to the defendant on or after 30 November 2015,
by representing that the insurance fees charged to those members did not include any fee payable to the member’s financial adviser, when in fact the systems and processes of the defendant to process “request to remove a financial adviser from an account” forms did not ensure that the fees charged to the account of a person who returned such a form would be reduced by an amount equivalent to the commissions previously paid to the person’s financial adviser in respect of the person’s insurance cover.
4.The defendant contravened s 963K of the Corporations Act during the period from 30 November 2015 to 25 August 2021 by giving conflicted remuneration to financial advisers or their advice licensees in respect of insurance cover held by members of the Asgard Fund, being the payment of commissions in respect of insurance cover obtained by members of the Asgard Fund under the master policies, which commission was paid as a percentage of the insurance premium payable in respect of the relevant member.
5.For the avoidance of doubt, the particular members referred to in each declaration are those identified in the relevant schedules to the statement of agreed facts and admissions and the supplementary such statement filed with the Court.
6.By engaging in the conduct giving rise to the contraventions the subject of each of declarations 1 to 4 above, the defendant:
(a)contravened s 912A(1)(b) of the Corporations Act by failing to comply with a condition on its licence; and
(b)contravened s 912A(1)(c) of the Corporations Act by failing to comply with the financial services laws.
AND THE COURT ORDERS THAT:
7.Pursuant to s 12GBA of the ASIC Act (as in force before 13 March 2019) and s 12GBB of the ASIC Act (as in force on and from 13 March 2019) and s 1317G of the Corporations Act, the defendant pay to the Commonwealth of Australia a combined pecuniary penalty in the amount of $20 million, in respect of:
(a)the defendant’s contraventions of s 12DB(1) of the ASIC Act referred to in declarations 1 to 3; and
(b)the defendant’s contraventions of s 963K of the Corporations Act referred to in declaration 4.
8.Pursuant to s 43 of the Federal Court of Australia Act 1976 (Cth), the defendant pay the plaintiff’s costs of the proceeding.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
BEACH J:
These reasons embody the ex tempore reasons that I gave in each of six proceedings brought by ASIC against Westpac Banking Corporation and its subsidiaries for declarations, pecuniary penalties and other relief for various contraventions of ss 12CB, 12DA, 12DB, 12DI and 12DM of the Australian Securities and Investments Commission Act 2001 (Cth) (the ASIC Act) and ss 912A, 962P, 963K and 1041H of the Corporations Act 2001 (Cth).
I heard and disposed of these six matters last month. There were different legal teams for each of the parties in each matter. In terms of the written submissions, I required and was provided with two types of submissions for use in each of the six proceedings. The first set of submissions contained the relevant legal principles. This set was common to all six proceedings. The second set of submissions was different in each proceeding and tailored to the specific contraventions in the particular proceeding before me.
In terms of the factual foundation upon which I proceeded, this was provided by specific statements of agreed facts filed in each case invoking s 191(2) of the Evidence Act 1995 (Cth); some of the statements were amended and further amended in some of the proceedings. These statements also contained admissions made by Westpac or its relevant subsidiary(s).
In relation to the hearing and disposition of these six proceedings, the process adopted was to list and hear them in half-day slots. After each hearing, and usually within 2 to 4 hours of their conclusion, I gave an ex tempore judgment; occasionally I reserved my decision until the following morning and then gave judgment with oral reasons.
At the request of the parties I have produced this omnibus set of reasons for all six proceedings. It contains for each case a corrected transcription of my ex tempore reasons together with the legal principles upon which I proceeded, which as I explained in each ex tempore judgment incorporated by reference the first set of submissions dealing with legal principles.
In summary, these reasons record why I imposed pecuniary penalties totalling $113 million on Westpac and its subsidiaries.
Let me begin by setting out the statutory provisions relevant to all six matters and the legal principles that I applied, and then I will repeat my reasons specific to each matter in the form of a corrected transcription of the ex tempore reasons.
The statutory provisions – contraventions
I should begin with some definitions and then turn to the substantive conduct provisions.
Definitions of financial product and financial services
Many of the provisions that applied to the six proceedings before me involved the statutory definitions for “financial product” and “financial service”.
Section 12BAA(1) of the ASIC Act and s 763A(1) of the Corporations Act contained the following general definition of “financial product”:
a facility through which, or through the acquisition of which, a person does one or more of the following:
(a) makes a financial investment…;
(b) manages a financial risk…;
(c) makes non-cash payments…
Both Acts contained further general definitions of “makes a financial investment”, “manages a financial risk” and “makes non-cash payments” (ss 12BAA(4), (5) and (6) of the ASIC Act and ss 763B, 763C and 763D of the Corporations Act), as well as a list of things which were specifically included as financial products (s 12BAA(7) and s 764A), which included a contract of insurance, any deposit taking facility made available by an authorised deposit-taking institution, a security, an interest in a registered scheme, and a superannuation interest (s 12BAA(7)(f) and s 764A(1)(g)).
A “credit facility” was excluded from the definition of financial product in the Corporations Act (s 765A and reg 7.1.06 of the Corporations Regulations 2001), but specifically included as a financial product for the purposes of the ASIC Act (s 12BAA(7)(k)). Regulation 2B of the Australian Securities and Investments Commission Regulations 2001 (Cth) sets out that a credit facility is essentially the provision of credit, being a contract, arrangement or understanding under which payment of a debt owed by one person to another person is deferred, or one person incurs a deferred debt to another person. It specifically includes any form of financial accommodation, a financial benefit arising from or as a result of a loan and a credit card.
Section 12BAB(1) of the ASIC Act and s 766A(1) of the Corporations Act contained the following definition referable to a “financial service”:
… subject to paragraph (2)(b), a person provides a financial service if they:
(a) provide financial product advice (see subsection (5)); or
(b) deal in a financial product (see subsection (7)).
Further, s 12BAB(5) of the ASIC Act and s 766B of the Corporations Act defined “financial product advice”, with some qualifications which are not relevant, as a recommendation or a statement of opinion, or a report of either of those things, that is intended to influence a person or persons in making a decision in relation to a particular financial product or class of financial products, or an interest in a particular financial product or class of financial products, or could reasonably be regarded as being intended to have such an influence.
The concept of “dealing” was also defined, and included applying for or acquiring a financial product or issuing, varying or disposing of a financial product (s 12BAB(7) of the ASIC Act and s 766C of the Corporations Act).
Section 12CB of the ASIC Act
Proceeding VID707 of 2021 (fees for deceased customers) includes admitted contraventions of s 12CB(1) of the ASIC Act.
Section 12CB relevantly provided (as in force throughout the penalty period as that term is defined in proceeding VID707 of 2021):
(1) A person must not, in trade or commerce, in connection with:
(a) the supply or possible supply of financial services to a person…; …
…
engage in conduct that is, in all the circumstances, unconscionable.
…
(3)For the purposes of determining whether a person has contravened subsection (1):
(a)the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and
(b)the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.
(4) It is the intention of Parliament that:
(a)this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct;…
Though not relevant for present purposes, until 26 October 2018 s 12CB(1)(a) concluded with “(other than a listed public company)”.
Section 12CC sets out a non-exhaustive list of factors to which the Court may have regard for the purpose of determining whether a person has contravened s 12CB(1). The matters enumerated assist in understanding the scope of the meaning of unconscionable conduct, though the presence of one or more matters listed or indeed their absence is not necessarily determinative (see Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (in liquidation) (No 2) [2017] FCA 709 at [63], with reference to ss 21 and 22(1) of the Australian Consumer Law, Schedule 2 of the Competition and Consumer Act 2010 (Cth)).
At all material times s 12CC(1) provided:
(1)Without limiting the matters to which the court may have regard for the purpose of determining whether a person (the supplier) has contravened section 12CB in connection with the supply or possible supply of financial services to a person (the service recipient), the court may have regard to:
(a)the relative strengths of the bargaining positions of the supplier and the service recipient; and
(b)whether, as a result of conduct engaged in by the supplier, the service recipient was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and
(c)whether the service recipient was able to understand any documents relating to the supply or possible supply of the financial services; and
(d)whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the service recipient or a person acting on behalf of the service recipient by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the financial services; and
(e)the amount for which, and the circumstances under which, the service recipient could have acquired identical or equivalent financial services from a person other than the supplier; and
(f)the extent to which the supplier’s conduct towards the service recipient was consistent with the supplier’s conduct in similar transactions between the supplier and other like service recipients; and
(g)if the supplier is a corporation—the requirements of any applicable industry code (see subsection (3)); and
(h)the requirements of any other industry code (see subsection (3)), if the service recipient acted on the reasonable belief that the supplier would comply with that code; and
(i)the extent to which the supplier unreasonably failed to disclose to the service recipient:
(i)any intended conduct of the supplier that might affect the interests of the service recipient; and
(ii)any risks to the service recipient arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the service recipient); and
(j)if there is a contract between the supplier and the service recipient for the supply of the financial services:
(i)the extent to which the supplier was willing to negotiate the terms and conditions of the contract with the service recipient; and
(ii)the terms and conditions of the contract; and
(iii)the conduct of the supplier and the service recipient in complying with the terms and conditions of the contract; and
(iv)any conduct that the supplier or the service recipient engaged in, in connection with their commercial relationship, after they entered into the contract; and
(k)without limiting paragraph (j), whether the supplier has a contractual right to vary unilaterally a term or condition of a contract between the supplier and the service recipient for the supply of the financial services; and
(l)the extent to which the supplier and the service recipient acted in good faith.
Relevant principles as to ss 12CB and 12CC were distilled by me in Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) (2020) 275 FCR 57; [2020] FCA 208 at [358] to [379] and for present purposes can be expressed in 13 points.
First, the relevant standard is a statutory standard, not limited by equitable doctrine, although the equitable doctrine provides some background against which the statutory concept may be appreciated.
Second, the evaluation of the conduct in all the circumstances requires close consideration of the facts. Section 12CC elaborates on the factual matters and circumstances that are to be considered. Assessing whether conduct in all the circumstances is to be characterised as unconscionable involves an evaluative judgment which has the consequence that the factors in s 12CC(1) must be considered together.
As to the third, fourth and fifth points, it is more convenient to set out what I said in ASIC v AGM (No 3) at [365] to [370]:
Third, one cannot simply align the statutory concept of unconscionable with something not done in good conscience in the sense in which equity has so treated the matter. It is clear from s 12CB and the factors that may be taken into account under s 12CC(1) that one is dealing with a broader notion. But reference to intellectual ideas of customary morality and societal values without further delineation and ready identification may be at too high a level of abstraction to be an objective touchstone. Further, such general themes may distract attention from the values that need to be considered, namely the values explicitly or implicitly enshrined in the text, context and purpose of the ASIC Act, the Corporations Act and any other relevant statutory framework applicable to the activities in issue. But in identifying and applying those values, and indeed in considering the relevant matters under s 12CC(1) applicable to the particular case, societal or community values may also be implicitly satisfied. For example, in considering conduct affecting a particular sub-group, for example an indigenous community, the application of each relevant matter under s 12CC(1) may take into account and may need to be tailored to the characteristics of that sub-group and the alleged contravener’s interaction therewith, consistent implicitly with community standards. But if unconscionable conduct is found, it will not be because of some characterisation of it as being against community values without more. Rather, it will be so characterised as being against the statutory construct informed by the values that I have identified and which I will partly expand upon in a moment, as applied to the characteristics and conduct of the participants involved in the commerce in question.
Fourth, let me say something on the question of “conscience”. In the context of equity, Kakavas explained the matter by reference to the appellant’s submissions in that case in the following terms (at [15] and [16]):
In advancing a claim based on the principle expounded by Mason J in Amadio, the appellant relies upon the standards of personal conduct compendiously described as the conscience of equity. According to Pomeroy’s Treatise on Equity Jurisprudence:
“the ‘conscience’ which is an element of the equitable jurisdiction came to be regarded, and has so continued to the present day, as a metaphorical term, designating the common standard of civil right and expediency combined, based upon general principles and limited by established doctrines, to which the court appeals, and by which it tests the conduct and rights of suitors, — a juridical and not a personal conscience.”
The conscience spoken of here is a construct of values and standards against which the conduct of “suitors” — not only defendants — is to be judged.
(My emphasis, citations omitted.)
As I said in Australian Competition and Consumer Commission v Medibank Private Ltd (2018) 267 FCR 544 at [239], in the present context dealing with the element of “conscience” in statutory unconscionability, the “construct of values and standards” is extended beyond the boundaries and content of what equity would normally embrace. The metaphorical term of “conscience” in the present context has an enhanced dimension. Moreover, it is not just a juridical conscience to use Pomeroy’s description. It is a statutorily created or recognised conscience with its construct of values and standards informed by the explicit and implicit values enshrined in the text, context and purpose of the ASIC Act and the Corporations Act. It is a “statutory norm of conscience” (Kobelt at [47] per Kiefel CJ and Bell J). And if that be the case, the qualifying epithet “good” in the phrase “good conscience” is otiose. The relevant conduct is either against the statutory construct of conscience or it is not; the qualifier of “good” in opposition to “bad” may have made sense when dealing with a moralistic version of conscience that had that implicit duality, but it is misconceived to suggest that the statutory construct so requires. Now any description of values even within the statutory construct of conscience will have attendant imprecision in terms of their boundaries and content. But it would be an exaggeration to say that they are so indeterminate as to be little more than a pretext to facilitate condemning conduct that is disapproved of simply on moral grounds.
As Gageler J explained in Kobelt at [87]:
The correct perspective is that s 12CB operates to prescribe a normative standard of conduct which the section itself marks out and makes applicable in connection with the supply or possible supply of financial services. The function of the court exercising jurisdiction in a matter arising under the section is to recognise and administer that normative standard of conduct. The court needs to administer that standing in the totality of the circumstances taking account of each of the considerations identified in s 12CC if and to the extent that those considerations are applicable in the circumstances.
As Nettle and Gordon JJ said in Kobelt at [153]:
[At] least in the Australian statutory context, what is involved is an evaluation of business behaviour (conduct in trade or commerce) in light of the values and norms recognised by the statute.
Fifth, in terms of any requirement to demonstrate “moral obloquy” or “a high level of moral obloquy”, the use of such labels is a gloss on the statutory text. As has been explained in numerous authorities in this area, the statutory language should not simply be restated by substituting words or a phrase that Parliament did not choose. At most, the statutory concept of unconscionable may accommodate a flavour of moral obloquy in the sense that it means more than “unjust”, “unfair” or “unreasonable” (Kobelt at [118] per Keane J), but it is to divert the relevant normative inquiry to specifically seek to identify its existence or to clothe the relevant conduct with such a conclusory label.
Now of course a contravention of s 912A(1)(a) may occur in a broad range of circumstances including, as here, where there is a serious departure from reasonable standards of performance. As I say, the contravening conduct here can be so categorised, particularly in relation to its failure to meet appropriate standards of performance when dealing with retail clients.
A significant penalty is obviously called for to meet the paramount objective of deterrence, in its 2 dimensions of general deterrence and specific deterrence.
Now given that the defendants have ceased operating their personal and financial advice businesses, there is a reduced need for the penalty to be directed towards specific deterrence, as compared with a scenario where the defendants were still operating such businesses. But of course the fact that the defendants have ceased operating financial advice businesses does not mean that the consideration of specific deterrence is not applicable.
The parties have put before me helpful submissions on the various factors to consider. Let me focus on several of them and begin with the nature and extent of the conduct.
In terms of the charging conduct, that conduct was engaged in by the defendants in the conduct of financial services businesses with respect to retail clients who usually can be taken to be, or are expected to be, in a position of vulnerability relative to the particular licensee. The charging conduct occurred with respect to contributions into superannuation or other investment products, which were products in respect of which the relevant clients had previously sought and in fact paid for personal financial product advice, and which might be expected to be long term and passive investments. Section 912A(1)(a), which relates of course to the conduct of licensees in the provision of financial services, will usually be directed, as in this case, to persons in a position of vulnerability to the licensee, and requires of that licensee a standard of conduct which is, at a minimum, efficient, honest and fair. In my view, any penalty should be sufficient to deter the defendants and other licensees from engaging in conduct below the expected standard in relation to the charging of fees to such persons.
Moreover, as is plain, the charging conduct was not isolated. The defendants admit that there were many cases in the penalty period where charging conduct occurred to the benefit of the defendants and/or their financial advisers or authorised representatives.
Let me say something about the systems failures.
During the penalty period, the systems and process failures related to charging, disclosure, record-keeping, training and application and fee loading processes. The number and breadth of these systems and process failures are clearly relevant to the assessment of an appropriate penalty.
These failures applied to each of the defendants and occurred and were not rectified throughout the penalty period.
The systems and process failures are likely to have caused or contributed to the unacceptable charging conduct during the penalty period. The defendants did not have systems in place to monitor, review or ascertain whether the charging of contribution fees had been disclosed to clients, or to ensure that the clients were not charged contribution fees unless they had been disclosed.
Further and significantly, the charging conduct and the systems and process failures occurred in the penalty period against a background where contribution fees had been the subject of internal discussion and investigation within Westpac since at least 2017.
Moreover in August 2018, Westpac had become aware of instances where customers had been charged contribution fees which had not been disclosed. Westpac had decided to stop charging contribution fees to new and existing clients in August 2018 by which time apparently it was industry practice to no longer charge contribution fees. Further, internal investigations in November and December 2018, and February and May 2019 identified further and continuing instances of contribution fees being improperly charged.
Let me turn to the question of remediation.
Westpac is currently undertaking a remediation program which includes the repayment of contribution fees with interest, including repayments to some groups of customers irrespective of whether those customers were affected by the charging conduct.
Specifically, for those customers for whom it is possible to determine the total amount of contribution fees charged on their accounts, all regular contribution fees and all ad hoc contribution fees that are less than $450 in total, increased to $1500 in the latter stages of the remediation, are to be or will be refunded. Where customers were charged contribution fees of more than $450, increased to $1500 in the latter stages of the remediation, contribution fees will be refunded unless it is established that those fees were properly disclosed. The remediation program, as I have indicated, is not just limited to the charging of contribution fees in the penalty period. It extends from 1 November 2011 to 30 June 2019 for Westpac, and from 1 November 2011 to 30 September 2019 for each of Magnitude and Securitor. The remediation program has also been subject to ongoing independent assessment and assurance by BDO Services Pty Ltd and Westpac has, of course, as to be expected, liaised closely with ASIC in relation to the processes and methodology of the remediation program and its progression.
I have been informed that as at 25 October 2021, about $12 million had been refunded to clients as part of this remediation program. And importantly and in favour of the defendants, an accounting provision of some $58 million has been made to cover any necessary payouts. As at 3 March 2022, about $18 million had been refunded to clients. Because the remediation program extends substantially beyond the penalty period and includes the repayment of contribution fees to large groups of customers irrespective of whether those customers were subject to the charging conduct, the remediation figures were not that useful as a proxy either for the loss that the defendants’ conduct caused to customers, or that much of a proxy for the profit the defendants earned from the charging conduct. But the broad scope of the remediation program assures me that the defendants have not retained as profit, contribution fees that ought not to have been charged.
Let me turn more broadly to the question of mitigation.
Dr Ruth Higgins, senior counsel for Westpac and the other defendants, put 8 matters to me in mitigation of penalty, each of which I accept.
First, she has expressed contrition on behalf of her clients for the contravening conduct, which I accept is sincere.
Second, there is no evidence that the conduct was deliberate. It seems to have been brought about by systems failures.
Third, the conduct was not engaged in or sanctioned by senior management of the defendants.
Fourth, disclosure failure notifications were given to ASIC under s 912D of the Corporations Act, the detail of which is set out in the statement of agreed facts at [88] to [90]. Further, updates have also been given on a regular basis to ASIC.
Fifth, once the defendants identified that improper deductions were occurring they took steps to stop engaging in the conduct, although the steps were not as immediate as they should have been and they should have occurred earlier. Further, as I have mentioned, there has been an extensive remediation program, including for a period much broader than the penalty period.
Sixth, the defendants have co-operated with ASIC throughout ASIC’s investigation and, of course, during this proceeding.
Seventh, the defendants have invested significant time and analysis in seeking to identify and rectify the systemic sources of the failings at the heart of the present problem.
Eighth, and as I have already touched on, Magnitude and Securitor no longer operate the businesses the subject of this proceeding. Further, on 30 June 2019, Westpac ceased providing personal financial advice through salaried financial advisors to clients of BT Financial Advice.
Of course though, and as I have previously said, this last point does not remove some need for specific deterrence but it certainly lessens that particular factor.
In summary, and taking into account all of these matters and in the context of the maximum penalties that could otherwise be imposed for this conduct and having regard, obviously, to the statutory purpose of s 912A(1)(a), in my view a penalty of $2 million for each defendant, totalling $6 million overall, is appropriate in the present case and satisfies the principal object of deterrence.
Moreover, for completeness, I should say that in setting these penalties at $2 million each for each defendant, there are no material differences in the position of the individual defendants with respect to the contravening conduct that, in my view, would warrant the imposition of different penalties for each defendant.
In those circumstances and for these reasons, I will make the orders and declarations sought.
NSD 1241 of 2021 (general insurance)
The present matter concerns the setting of a pecuniary penalty and the making of other necessary orders to deal with the contraventions of the ASIC Act and the Corporations Act by Westpac concerning various insurance policies.
The conduct occurred during the period 30 November 2015 to 30 June 2021 and involved two categories of conduct.
The first category, which the parties described as the duplicate policy issue, involved Westpac distributing home and contents insurance policies and landlord insurance policies issued by Westpac General Insurance Limited to certain customers, where the customer already held a home and/or contents insurance policy or a landlord insurance policy in respect of the same risk address and for an overlapping period. So, premiums were collected for overlapping periods in respect of both policies, and annual renewal documents were sent out in relation to both policies.
Westpac has admitted in connection with the duplicate policy issue in relation to 3,899 customers, contraventions of ss 12DA(1) and 12DB(1)(b), (h) and (i) of the ASIC Act and ss 912A(1)(a), (c), (ca) and (5A) and s 1041H of the Corporations Act.
The second category of conduct which the parties described as the non-consent issue, involved Westpac distributing such policies issued by Westpac General Insurance Limited to certain customers who did not consent to being issued with the relevant policy.
Westpac has admitted in connection with the non-consent issue, in relation to 329 customers, contraventions of ss 12DA(1), 12DB(1)(b) and (i) and also 12DM(1) of the ASIC Act and ss 912A(1)(c) and 1041H of the Corporations Act.
I should say at this point that Mr David Thomas, senior counsel for Westpac, drew my attention to the fact that for the non-consent issue, no contraventions were being admitted or asserted concerning ss 912A(1)(a) or (ca). But that point impressed him more than it impressed me.
In terms of the policy issuer, I have made reference to Westpac General Insurance Limited, but I should make two points before proceeding further. First, it is not a party to the present proceeding. Second, it ceased to be a subsidiary of Westpac on 1 July 2021.
Now the parties have put before me a joint position concerning penalties and other relief, including declarations and compliance orders.
The factual foundation is provided in a statement of agreed facts and admissions tendered for the purposes of s 191 of the Evidence Act. I have also been provided with joint submissions specific to this matter and a broader submission as to the relevant legal principles, none of which are contentious for present purposes.
ASIC and Westpac have jointly submitted that pecuniary penalties in a total aggregate amount of $15 million are warranted, comprising:
(a)$13 million for Westpac’s contraventions of civil penalty provisions in the ASIC Act in relation to the duplicate policy issue and also the non-consent issue, and
(b)$2 million for Westpac’s contraventions of civil penalty provisions in the Corporations Act in relation to the duplicate policy issue for conduct from 13 March 2019.
As I have said, declarations and compliance orders are also sought.
I would say at the outset that I have no difficulty with the declarations sought, and they will be made.
It is necessary to go into more detail however concerning the pecuniary penalty orders and the compliance orders.
In this regard, what is sought are:
(a)pecuniary penalty orders pursuant to ss 12GBA as in force before 13 March 2019 and s 12GBB as in force on and from 13 March 2019 of the ASIC Act, with respect to Westpac’s contraventions of ss 12DB(1)(b), (h) and (i) and also s 12DM(1) of the ASIC Act;
(b)pecuniary penalty orders pursuant to s 1317G of the Corporations Act, with respect to each of Westpac’s contraventions of s 912A(5A) of the Corporations Act; and
(c)compliance orders pursuant to s 1101B(1) of the Corporations Act and s 12GLA(1) of the ASIC Act.
Let me go into some of the background.
Westpac is the holder of an Australian financial services licence which authorised Westpac to carry on a financial services business to provide the services referred to in the licence, including to deal in a financial product by:
(a)varying or disposing of the financial product which was a general insurance product; and
(b)varying or disposing of a financial product on behalf of another person in respect of general insurance products.
As I have said, during the relevant period Westpac General Insurance Limited was the issuer of the policies. In connection with the distribution arrangements between Westpac General Insurance Limited and Westpac in respect of the policies, Westpac General Insurance Limited appointed Westpac to provide services as agent of Westpac General Insurance Limited, including entering into policies, varying or renewing policies and collecting premiums from customers.
Westpac’s distribution of the policies issued by Westpac General Insurance Limited was authorised by Westpac’s AFSL.
Let me turn first to the duplicate policy issue. During the relevant period, Westpac caused Westpac General Insurance Limited to issue to the relevant Westpac customers a policy in circumstances where the customer already had a policy in respect of the same risk address and for the same or similar risk.
During the relevant period, 8,049 duplicate policies were issued to 3,899 customers.
And of the 8,049 duplicate policies issued to those customers:
(a)1,189 policies had duplicate coverage commencing after 13 March 2019;
(b)approximately 571 customers had duplicate coverage commencing after 13 March 2019;
(c)1,390 policies had duplicate coverage commencing before 13 March 2019 and ending after 13 March 2019; and
(d)approximately 637 customers had duplicate coverage commencing before 13 March 2019 and ending after 13 March 2019.
Those dates are relevant in terms of the way certain contraventions and remedies can be dealt with.
Westpac’s contravening conduct in relation to the duplicate policy issue arose in the following circumstances in respect of each customer. The material that I am referring to in my reasons comes, of course, from the statement of agreed facts. Apparently the customer went into a branch, or telephoned Westpac, and requested a change to their policy. Due to Westpac’s system limitations, the changes requested by these customers required a new policy to be issued which, once a new policy was created, required a cancellation request to be made by the Westpac staff member for the original policy. Repeatedly though, the cancellation request was not made, with the result that the customer ended up with two policies in place, the first being the policy that the customer asked to be changed, and the second being the new policy that was created with the changes that the customer was asking for. Thereafter, Westpac collected premiums for an overlapping period in respect of both policies and sent annual renewal documents in relation to both policies.
The limitations in Westpac’s systems that led to the creation of new policies without the original policy being cancelled and the failure to detect duplicate policies with no genuine reason for that duplication can be categorised in at least four different ways.
First, where a customer requested a change to a policy, Westpac’s systems did not permit the change to be made as an amendment to the policy. Rather, a new policy was issued that has been described in the material before me as system-driven churn. It was then up to the relevant staff member responding to the customer’s request to cancel the existing policy. Westpac’s underwriting manual apparently directed Westpac staff to the circumstances in which an existing policy had to be cancelled before a new policy could be issued.
Second, requests to issue new policies processed though the assisted channels were not escalated to the underwriting team of Westpac General Insurance Limited for review and approval. There was therefore no manual review or automatic review of whether a duplicate policy already existed for the same risk address.
Third, Westpac staff did not always cancel the policy where required by the underwriting manual. This was a particular issue apparently in the assisted channels where there was not a mandatory process or procedure in place to ensure the cancellation of an existing policy after issuing a new policy for the same risk address. Nor apparently did Westpac’s systems trigger any warning requiring a staff member to confirm that they were not creating a duplicate policy without a genuine reason.
Fourth, Westpac’s system did not detect where a new policy had been created by system-driven churn but the original policy had not been cancelled by Westpac staff. As a consequence, customers came to be charged premiums for both policies issued in respect of the same risk address.
The failure to cancel policies, and the lack of controls in place to prevent or detect the duplicate policy issue, was apparently identified by Westpac’s group audit during the course of its annual audit in 2017. An audit report apparently was produced on 25 August 2017 but the Westpac group executive risk committee was only first notified of the duplicate policy issue on 17 July 2018.
Let me at this point say something about customer remediation.
Commencing in March 2018, Westpac General Insurance Limited conducted a remediation process to refund customers affected by the issuance of duplicate policies without a genuine reason. That process included historical and in-force policies. Apparently this process also covered duplicate policies outside the relevant period, and included a cohort of customers with a period of insurance prior to 30 September 2007. The initial methodology employed was revised in March 2020 to address some deficiencies.
Under this remediation process, attempts were made to contact all customers who potentially had a duplicate policy with a view to determine if any of the policies that they still held or had held were duplicate policies that were not issued for a valid reason. Apparently a desktop review was conducted to determine what has been described as the validity of the duplicate policies. If the desktop review failed to identify the validity of the duplicate policy, an attempt was then made to contact the customer to confirm whether the policy was a duplicate policy. If the policy was confirmed as a duplicate policy, then a refund for the overlapping period apparently was provided to the customer together with an interest payment.
In relation to the remediation process:
(a)as at 23 September 2021, Westpac had remitted remediation to 4,159 customers totalling $7,630,773.74;
(b)as at 23 September 2021, Westpac had been unable to contact 3,093 customers, but had attributed to them remediation refund entitlements in the total amount of $3,980,810.97 and paid this amount into an unclaimed monies provision;
(c)Westpac processed refunds for 57 customers in the pre-October 2007 cohort using the average refund methodology, but 56 of those customers could not be contacted and the refunds were also applied into an unclaimed monies provision; and
(d)330 customers who held current duplicate policies could not be contacted and an automated stop was put in place for those customers to ensure no renewal was processed.
It would seem that Westpac’s remediation process was completed as at 30 September 2021.
Let me turn to the contraventions concerning the duplicate policy issue.
As a consequence of Westpac’s conduct in connection with the supply of the services, and the supply of financial services by Westpac General Insurance Limited, during the relevant period Westpac represented to each customer that:
(a)Westpac had arranged or would arrange for the cancellation of the original policy, which was a representation concerning the existence of a right, within the meaning of s 12DB(1)(i) of the ASIC Act;
(b)the customer had agreed to continue to acquire services provided by the original policy, within the meaning of s 12DB(1)(b);
(c)the customer had a continuing need for the original policy upon the issuance of the new policy, which was a representation within the meaning of s 12DB(1)(h); and
(d)the customer was liable to pay the premiums for the original policy and that Westpac and/or Westpac General Insurance Limited had a continuing right to collect amounts for premiums in respect of the original policy, which were representations concerning the existence of a right within the meaning of s 12DB(1)(i).
These representations were false or misleading because:
(a)Westpac did not arrange for the cancellation of the original policy;
(b)each customer had not agreed to the original policy continuing from the time of the change;
(c)each customer did not have a need for the original policy upon the issuance of the new policy; and
(d)having conveyed to the customer that the original policy would be cancelled, Westpac did not have a right to seek and collect the premiums for the original policy.
As a consequence, during the relevant period, in relation to each of what has been described as the duplicated policy customers, Westpac committed at least one contravention of each of ss 12DB(1)(b), 12DB(1)(h) and 12DB(1)(i).
Further, during the relevant period, Westpac also engaged in conduct that was misleading or deceptive or likely to mislead or deceive and so contravened s 12DA(1) of the ASIC Act and s 1041H of the Corporations Act. These provisions are not civil penalty provisions, and so only declarations are sought.
Further, contraventions of s 912A(1) of the Corporations Act have been made out.
During the relevant period until 24 May 2021, Westpac failed to do all things necessary to ensure that the services were provided efficiently, honestly and fairly and so contravened s 912A(1)(a), in that Westpac failed to have in place or failed to take adequate steps to ensure that Westpac General Insurance Limited had in place any or adequate:
(a)risk management procedures the objectives of which were to detect breaches of the financial services laws in relation to the issuance of duplicate policies;
(b)risk management procedures the objectives of which were to prevent breaches of the financial services laws in relation to the issuance of duplicate policies; and
(c)risk management procedures the objectives of which were to monitor the success or otherwise of the relevant detective controls and preventative controls.
Further, during the relevant period until 24 May 2021, Westpac failed to take reasonable steps to ensure that its representatives complied with financial services laws, and thereby contravened s 912A(1)(ca).
The contraventions of ss 912A(1)(a) and (ca) gave rise to contraventions of s 912A(5A), which is of course a civil penalty provision but only coming into force from 13 March 2019.
For the duration of the relevant period prior to 13 March 2019, in relation to the contraventions of ss 912A(1)(a) and 912A(1)(ca) those were not civil penalty contraventions and so as I have indicated only declarations are sought.
At this point let me turn to the non-consent issue. Westpac’s contravening conduct in relation to the non-consent issue arose in the following circumstances in respect of each non-consent customer. The non-consent customer engaged in a conversation apparently with a Westpac or Westpac brand staff member either in a branch or at a call centre during which the customer, either expressly or by implication, demonstrated that the customer did not consent to being issued with a policy. The example was given of some of the affected customers only perhaps requesting a quote. Nevertheless, the customer was subsequently issued with a policy and was sent a pack of documents provided to new customers at or around the time when the new policy was issued. This has been described as the new business welcome pack. The new business welcome pack informed the customer that he or she had been issued with a policy. And documents in the new business welcome pack included statements regarding the premium that would be payable by the customer on either a monthly or an annual basis.
In this context, 329 customers:
(a)were issued polices that had been initiated through either a branch or a call centre;
(b)were sent a new business welcome pack which informed the customer that they had been issued with a policy and which contained relevant policy documents with relevant representations as to payment; and
(c)had called apparently to cancel their policy within 90 days of inception.
Those 329 customers did not consent to the issuing of a policy.
In this respect, during the relevant period Westpac’s controls were ineffective in preventing the issue of and detection of what has been described as non-consent polices.
Let me say something about the contraventions relevant to the non-consent issue.
By sending the new business welcome packs, Westpac represented to each non-consent customer that the customer had agreed to acquire the policy from Westpac in circumstances where they simply had not. These representations each constituted a false or misleading representation in connection with the supply of the services, that a particular person had agreed to acquire services, in contravention of s 12DB(1)(b).
Each of the representations was false or misleading because each non-consent customer had not agreed to acquire the policy from Westpac.
In addition, in respect of the non-consent customers, by each of the new business welcome packs that were provided to the customer during the period 30 November 2015 to approximately 30 October 2020, Westpac represented to the customer that Westpac was entitled to be paid the amount of premium set out in the new business welcome pack.
These entitlement to payment statements each constituted a false or misleading representation, in connection with the supply of services, that each non-consent customer was liable to pay the premiums for the policy set out in the new business welcome pack, and that Westpac had a continuing right to collect amounts for those premiums in respect of the policy, which were representations concerning the existence of a right within the meaning of s 12DB(1)(i).
Each of the entitlement to payment statements was false or misleading because Westpac was not entitled to be paid the amount of premium set out in the new business welcome pack because the non-consent customer had not consented to the policy being issued.
As a consequence of these matters, during the relevant period, with respect to each of the non-consent customers, Westpac committed at least one contravention of each of ss 12DB(1)(b) and 12DB(1)(i).
Further, during the relevant period, Westpac also engaged in conduct that was misleading or deceptive or likely to mislead or deceive, and so contravened s 12DA(1) and s 1041H. Only declarations of these contraventions are sought.
Let me say something about s 12DM(1).
In my view, contraventions of s 12DM(1) have also been established. Westpac asserted a right to payment which was unsolicited.
The entitlement to payment statements each constituted an assertion by Westpac to a right to payment from the non-consent customer for a policy which was issued without any request made by the person or on the person’s behalf. By making the entitlement to payment statements, Westpac asserted a right to payment from another person for unsolicited financial services, in contravention of s 12DM(1).
Finally, as a consequence of the contraventions of s 12DB and 12DM of the ASIC Act, which are of course financial services laws, Westpac contravened s 912A(1)(c) of the Corporations Act.
Let me turn to the assessment of penalty. The parties have made extensive submissions concerning various factors, but let me focus on the following. And for the moment, let me focus on the duplicate policy issue.
First, I accept that Westpac’s conduct was not deliberate.
It was the result of inadequate risk management and systems failures, including inadequate or absent detective, preventative and monitoring controls, mandatory processes and procedures, appropriate technology systems, recordkeeping and staff training. Each of those subject areas were demonstrated to be inadequate and quite deficient in the circumstances.
Moreover, Westpac knew of the duplicate policy issue from at least 2015 but did not implement effective steps to address the issue until, on the material, it seems May 2021. This was unsatisfactory to say the least.
In elaboration of that observation, let me say this. Westpac did not take action to rectify its failures until March 2018 and such action was not rated as effective until at least May 2021, despite individuals holding senior roles having been provided with copies of the branch issue register identifying complaints from customers regarding the duplicate policy issue since at least December 2015, and the general insurance audit identifying the duplicate policy issue in August 2017.
Further, the monthly reporting process, being the primary detective control, was apparently suspended between November 2019 and November 2020. Further detail about that matter is set out in the statement of agreed facts.
In my view, Westpac’s approach to prevention was unsatisfactory, and I will not elaborate further on that matter for present purposes. That is the first matter that I wanted to raise.
Second, the duplicate policy issue was partly the result of the failure of Westpac staff, who were not very senior, to cancel an original policy, and partly the result of a lack of preventative, monitoring and detective controls, which were matters for which clearly senior officers of Westpac were responsible.
Individuals who held senior roles within Westpac were aware that complaints by customers were being received in connection with the duplicate policy issue.
Third, Westpac’s records do not allow it to determine the total premiums collected in connection with duplicate policies.
Now the Westpac customer remediation program has returned $7,630,773.74 to 4,159 customers. Westpac has been unable to contact 3,093 customers, but has attributed to them remediation refund entitlements in the total amount of $3,980,810.97. There is an unknown number of customers from the cohort of relevant customers who had one or more duplicate policies without a genuine reason, but due to the limitations of its systems Westpac is not able to identify whether those customer’s premiums have been refunded in full, nor can it confirm if those customers have received interest payments.
But the information available to Westpac records refunds and interest in relation to policies held by the customers relevant to the duplicate policy issue which totalled at least $7,373,930.25 of refunds and $608,367.51 of interest.
I should note that I accept that the nature of the contraventions means that the amount of premiums that are remediated effectively reflect the profit to Westpac derived from the conduct prior to remediation. At the least I am prepared to accept that that is a suitable proxy and I have said so in other analogous cases in the last few days.
Fourth, Westpac’s compliance systems have been improved since these contraventions, but Westpac’s systems should have been improved much earlier when Westpac became aware of issues with duplicate policies. Further, Westpac should have implemented risk controls as it updated its systems to ensure that it was not possible to issue duplicate policies for no genuine reason and that, in the transitional period, any duplicate policies were detected and cancelled in a timely fashion. Further, the preventative control system as recently as May 2021 apparently did not prevent all duplicate policies.
Fifth, I should note various mitigating factors in favour of Westpac in terms of the duplicate policy issue:
(a)Westpac voluntarily disclosed certain breaches to ASIC in 2018 and since that time has fully assisted ASIC in its investigation.
(b)Further, Westpac has admitted the contraventions in a timely fashion.
(c)Further, Westpac has comprehensively remediated its customers.
Let me turn to the non-consent issue and just focus on the following points.
First, the non-consent issue was partly the result of the failure of non-senior staff to appropriately create policies, or monitor policies which had been created, but it was also partly the result of a lack of preventative, monitoring and detective controls which as I have said in the duplicate policy question and so too here were matters for which senior officers of Westpac were responsible.
Individuals who held senior roles within Westpac were aware from no later than July 2016 apparently that customer complaints were being received in connection with the non-consent issue.
Second, it is well apparent that Westpac’s compliance systems were not adequate to prevent the contraventions.
Third, for the 329 non-consent customers Westpac refunded premiums paid totalling at least $188,503.76. It can therefore be assumed that Westpac inappropriately charged premiums in at least that amount.
Fourth, similar mitigation factors apply as for the duplication question, save that the non-consent issue was identified by ASIC following a production of material by Westpac on 12 February 2021. Westpac provided further information to ASIC about the non-consent issue in response to a 912C notice issued on 6 April 2021 and co-operated thereafter. It seems on the material that it co-operated more comprehensively with ASIC on the duplication issue than perhaps on the non-consent issue, although I do not need to elaborate further about that.
Now let me make some general points applicable to both the duplication issue and the non-consent issue. As I have indicated, in aggregate the parties have put to me a figure of $15 million, $13 million for the ASIC Act contraventions and $2 million for the Corporations Act contraventions.
First, I have considered the theoretical maximum for the admitted contraventions, but it is not a useful yard-stick in the present case, given that the bare arithmetic throws up some billions of dollars.
Second, in terms of the contraventions under the ASIC Act, in my view the duplicate policy issue should be seen as one course of conduct, and the non-consent issue should be seen as one course of conduct. On this aspect, $10.5 million is appropriate for the duplicate policy issue, and $2.5 million is appropriate for the non-consent issue. So that for the ASIC Act contraventions, $13 million is the appropriate aggregate amount. And for the contraventions of s 912A(5A) of the Corporations Act concerning the duplicate policy issue, $2 million is an appropriate amount.
Third, I have applied the totality principle both in considering the $10.5 million for the ASIC Act contraventions concerning the duplicate policy issue, together with the $2 million for the Corporations Act contraventions concerning the duplicate policy issue. And I have also looked at a second dimension to the totality principle overall in terms of aggregating the $13 million for all ASIC Act contraventions together with $2 million for the Corporations Act contraventions.
Fourth, and most importantly, I consider that the paramount objective of deterrence, in the 2 dimensions of specific deterrence and general deterrence, will be met by imposing an aggregate penalty of $15 million. And in saying that I have, of course, had regard to findings against Westpac and its subsidiaries in other cases concerning past contraventions of the statutory provisions, outside the 6 proceedings before me.
In summary then, $15 million in aggregate is to be imposed as the pecuniary penalty, particularly where I will also make compliance orders. Now I had an interesting discussion with counsel this morning on their scope. But I do not need to linger further on this aspect. The compliance orders appear to me to be adequate. Indeed, they go beyond the scope of the duplicate policy issue and the non-consent issue.
I will make declarations and orders consistent with these reasons.
Conclusion
Let me address four final matters.
First, before embarking on the hearings I assured myself that there had been a prima facie calibration of the penalties sought in any one of the six proceedings against the penalties sought in any one or more of the other proceedings. This was also confirmed from time to time in the running of the proceedings by ASIC’s varying senior counsel.
Second, the parties before me agreed that whatever the sequencing of the hearings and their timing of disposition, no finding in one proceeding should be used as a prior finding of past misconduct in any other proceeding.
Third, it should be obvious given how I sequenced and disposed of the matters that although I applied the totality principle in the context of each particular proceeding, I did not apply any meta-totality principle over all proceedings. To do otherwise was neither practical nor principled.
Fourth, although the cases before me did not involve any forensic contest requiring my resolution, it should be appreciated that the extensive statements of agreed facts, and in some cases voluminous annexures, were the end-point of lengthy investigations both by ASIC and Westpac, the synthesis of the substantial material gathered, and negotiation between very well resourced parties, one promoting the public interest and the other promoting its private interest. Given this competing tension that ultimately generated the comprehensive factual narratives in each case, one can be confident that the essential factual propositions agreed to were well informed and comprehensive, rather than skewed and incomplete, even accepting that there may have been an element of compromise on both sides.
In summary, I have sought to succinctly explain my disposition of the six proceedings before me. I should conclude by acknowledging that I was only able to deal with these cases in the fashion that I indicated at the outset of these reasons because of the notable efficiency with which they were prepared and presented by the teams of counsel and instructing solicitors involved.
I certify that the preceding five hundred and sixty-seven (567) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Beach. Associate:
Dated: 6 May 2022
SCHEDULE OF PARTIES
VID 707 of 2021 Respondents
Second Respondent SECURITOR FINANCIAL GROUP PTY LIMITED (ACN 009 189 495) Third Respondent MAGNITUDE GROUP PTY LTD (ACN 086 266 202) Fourth Respondent ADVANCE ASSET MANAGEMENT LIMITED (ACN 002 538 329) Fifth Respondent ASGARD CAPITAL MANAGEMENT LIMITED (ACN 009 279 592) Sixth Respondent BT FUNDS MANAGEMENT LIMITED (ACN 002 916 458) Seventh Respondent BT FUNDS MANAGEMENT NO. 2 LIMITED (ACN 000 727 659) Eighth Respondent BT PORTFOLIO SERVICES LIMITED (ACN 095 055 208)
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