The class action is against Westpac’s subsidiary companies BT Funds Management and Westpac Life Insurance Services and relates to aspects of BTFM’s BT Super for Life cash investment option, with the damages sought by the claim unspecified at the time.
Slater and Gordon filed the class action on behalf of superannuation members who were allegedly short-changed by the bank’s super funds.
The case alleged that BT was short-changing its members who invested in the super for life cash-only option by investing through Westpac Life and allowing it to earn substantial fees despite it reportedly providing no valuable service.
Slater and Gordon alleged that, rather than directly investing funds, BT chose to use Westpac Life as an intermediary who then invested the money in an externally managed cash fund.
Special counsel at Slater and Gordon, Nathan Rapoport, said Westpac Life was given discretion about the rates that it would pass on to members and, at times, kept almost half of the returns.
“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,” Mr Rapoport said.
He added that Westpac Life achieved reasonable returns on money, but the arrangement meant that it kept most of the benefit for itself.
“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 said.
Both BT Funds Management and Westpac Life Insurance Services said that they would be defending the claims.
The legal action is the latest lodged against the bank, who is also fighting off a Maurice Blackburn class action in relation to alleged breaches of responsible lending obligations under the Consumer Credit Protection Act.
However, a recent Federal Court case brought against the bank by the financial services regulator was recently dismissed by the court. ASIC has since said that it will “review” the court verdict.