The case concerned two campaigns where Westpac had contacted 15 members via phone and advised each person to accept an offer to roll over their external superannuation accounts into their account with the big four bank.

Personal advice, as defined under the Corporations Act 2001, includes financial product advice given to a person in circumstances where a reasonable person might expect the provider to have considered one or more of the person’s objectives, financial situation and needs – as opposed to general advice, where the product advice is not accounting for personal circumstances.

The Corporations Act imposes more onerous obligations on advisers who provide personal advice. But the High Court had ruled that Westpac, regardless of whether it had intended to provide general advice, had strayed into personal advice for a number of reasons, and therefore should have complied with its obligations.

Nathan Hodge, partner at legal firm King & Wood Mallesons, has cautioned that the ruling, which marked a new divide between personal and general advice, will have knock-on effects for providers.

“I’d say it really calls into question some general advice distribution methods,” Mr Hodge told FSC (Financial Services Council) members in a webinar on Tuesday.

“What I would say is probably not all general advice is going to be impacted by the High Court decision, because often, there’s general advice in marketing material that’s just set out to people. That type of general advice is probably not going to be impacted by what the High Court says.

“But where it’s really going to start to come under pressure is where there’s some sort of live discussion with the client. So, obviously, face-to-face meetings, call centres over the phone, even electronically via chatbots, or possibly even social media.”

Call centres, chatbots and drop-in centres are expected to have more pressure weighing on them, with providers now needing to understand what may have been intended as general advice has actually strayed into personal advice territory.

“That could then wind back a lot of those helpful, really good interactions with people,” Mr Hodge added.

Zach Castles, policy manager for advice at the FSC, echoed Mr Hodge’s warnings, adding technology will also have to be accounted for.

“There is concern as technology changes around targeted marketing material, elements of intrafund advice [and] various pieces of the anecdotal contributions from our members show that there is a concern that this could add the chilling effect, and we’re already seeing that to a degree in terms of how regulation is interpreted across the industry more broadly,” Mr Castles said.

An ASIC report found that around 75 per cent of members in super funds are accessing general advice, but Mr Castles added, although it is used broadly, consumers don’t necessarily understand what they are receiving.

New research commissioned by the FSC and completed by consultancy Pollinate has found a mere 18 per cent of consumers have received advice, but of those who haven’t, 42 per cent want to seek advice but don’t know where to start.

The research will form the backbone for a paper the FSC is preparing on the advice system, while it also pushes for access to “simple advice”.

“It’s very clear from the research that consumers fundamentally don’t understand what they’re getting necessarily,” Mr Castles said.

“The model of advice and future is going to need to respond to that, to have a clear guardrail around what advice exactly is.”

The FSC will propose a range of measures in the white paper, building on Rice Warner’s previously pitched idea of simple advice, which would allow consumers to access basic information, addressing simple insurance needs and issues.

“The model of advice itself is somewhat broken because it’s misaligned from the level of risk that is carried with each form of advice and so to respond to the issues that consumers need to respond to all of those issues that sort of surged as COVID-19 started impacting the economy last year,” Mr Castles said.

“We need to look at how we realign that framework, realign the advice system with the level of risk, so we hope to talk more on that in coming weeks.”