Law firm Slater and Gordon has filed a class action against two Westpac subsidiaries on “behalf of thousands of superannuation members who were shortchanged by the bank’s super funds”.
The Westpac subsidiaries are BT Funds Management Limited and Westpac Life Insurance Services Limited.
This is the third class action in Slater and Gordon’s Get Your Super Back campaign – the other two being against Colonial First State and AMP – which has its roots in the Banking Royal Commission.
“The case alleges BT has been shortchanging its members who invested in the BT Super for Life cash-only option by investing through Westpac Life and allowing it to earn substantial fees for providing no valuable service,” said a statement by Slater and Gordon.
‘Fees for no service’ was a key issue at the Royal Commission.
“Rather than investing member funds directly, BT chose to use Westpac Life as an intermediary, who then invested the money in an externally managed cash fund.”
The class action alleges that BT breached its duty to act in the best interest of members, and Westpac life was involved in this breach, said Slater and Gordon Special Counsel Nathan Rapoport.
He said that Westpac Life had “complete discretion” over how much interest it would pass on to members, and sometimes “kept almost half of the returns on members’ money for itself”.
“This has resulted in members losing out on potentially thousands of dollars over many years.”
“In recent years Westpac Life actually achieved reasonable returns on members’ money, but the arrangement meant that it kept much of that benefit for itself. One year, Westpac Life earned returns of around 2.5 per cent, but it delivered an interest rate of only 1.3 per cent to members.”
“Superannuation members trusted BT with their retirement savings, but instead of seeking the best returns available for members, it appears BT chose to line the pockets of another entity in the Westpac group at the expense of its members.”
“We believe Westpac Life provided no service that could justify it retaining such a large part of the returns generated from members’ money, and we want the difference paid back to members.”
In a statement to the stock market, Westpac confirmed it had received the class action filed against its subsidiaries, that “the damages sought by the claim are unspecified”, and that BT Funds Management Limited and Westpac Life Insurance Services Limited “will be defending the claims”.
The class action is being funded by litigation funder Therium Capital Management.