Retirement
Big 4 caught up in super class action strife
Thousands of Australian super fund members could soon have access to remediation, with a new class action alleging they’ve been shortchanged by the subsidiaries supposed to act in their best interests.
Big 4 caught up in super class action strife
Thousands of Australian super fund members could soon have access to remediation, with a new class action alleging they’ve been shortchanged by the subsidiaries supposed to act in their best interests.
Slater and Gordon has filed the class action in the Federal Court of Australia against Westpac subsidiaries BT Funds Management Ltd and Westpac Life Insurance Services Ltd, which alleged that thousands of its superannuation members have been shortchanged by the bank’s funds through no provision of valuable service.
In a statement, the plaintiff law firm said this is the third class action to be filed as part of Slater and Gordon’s “Get Your Super Back” campaign launched off the back of the 2018 royal commission.
The case alleges that BT Funds Management has been shortchanging 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.
It was reported that 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 damages being sought are as of yet unspecified, according to an ASX statement from Westpac.
Both BT Funds Management and Westpac Life Insurance Services have said they would be defending the claims.
Special counsel at Slater and Gordon, Nathan Rapoport, said Westpac Life was given “complete discretion” about the interest rates that it would pass on to members, and at times kept almost half of the returns on members’ money for itself.
Mr Rapoport said this has resulted in members losing out on potentially thousands of dollars over a number of years.
He outlined that the class action alleges that BT had breached its duty to act in the best interests of its members, and that Westpac Life was involved in this breach.
“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,” the lawyer commented.
“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,” he added.
According to Mr Rapoport, in 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.
“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,” he continued.
It comes after ASIC commissioner John Price’s comments earlier this week that the current costs of remediation for misconduct in the financial system amounts to $9 billion.
Westpac recently had to fend off a civil case from ASIC with regard to its responsible lending practices and obligations.
The new class action also follows the announcement in July that William Roberts Lawyers would be moving forward with a class action against Suncorp Super.
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