SYDNEY (Reuters) - Australia’s Westpac Banking Corp (WBC.AX) has been served a class action lawsuit accusing it of charging thousands of pension fund customers for services they never received, joining a parade of big-ticket litigation arising from a major inquiry into the financial sector.
The legal action against Australia’s second-biggest bank, revealed by Westpac to the stock market on Friday, is one of almost a dozen lawsuits resulting from a Royal Commission inquiry that found evidence of widespread misconduct in the financial sector.
Westpac said it would defend itself against the civil Federal Court claim, which was filed against two of its subsidiaries by law firm Slater and Gordon Ltd (SGH.AX) on Wednesday afternoon.
The firm did not specify what damages it was seeking from Westpac. It has said it is seeking more than A$100 million against CBA, while it has also not specified damages against AMP.
The most recent lawsuit alleges that Westpac’s pension fund, BT, invested customer money in a Westpac-owned investment vehicle, which then kept nearly half the profit before returning the proceeds to pension fund customers.
“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,” said Slater and Gordon lawyer Nathan Rapoport in a statement on Friday.
The Royal Commission inquiry in 2018 excoriated the banking industry, along with the broader financial sector, for rampant fee-gouging including widespread charging of fees for no actual service.
Even before the inquiry delivered its final report in February, class actions against Australia’s financial giants began to be filed. There are now about 10 class actions stemming from the Royal Commission before the courts.
In the court filing against Westpac subsidiaries BT Funds Management Ltd and Westpac Life Insurance Services Ltd, Slater & Gordon said that by failing to invest the retirement money directly, Westpac contravened its legal obligations to seek “the highest obtainable net earnings on the investment ... within an appropriate investment risk profile.”
Westpac Life, the investment vehicle which handled the funds, had generated returns of 2.5% a year in recent years but gave only 1.3% back to the pension fund, the filing said.
Westpac Life either knew about, failed to make inquiries about, or “wilfully shut its eyes to the obvious” about the fact that keeping so much of the returns amounted to a breach of the fund’s duty of care, it added.
Reporting by Byron Kaye in SYDNEY and Aby Jose Koilparambil in BENGALURU; Editing by Jane Wardell