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This is how Westpac broke the law and made $650 million
The Federal Court has found Westpac broke the law by not acting in customers’ best interests when the bank conducted a campaign to convince Aussies to roll over external super funds to their existing Westpac super fund account.
The campaign saw the bank’s funds under management increase by nearly $650 million.
In a Federal Court judgement issued 21 December, Federal Court judge Justine Gleeson found the major bank “failed to do all things necessary” to ensure its services “were provided efficiently, honestly and fairly”, contravening s 912A(1)(a) of the Corporations Act 2001 (Cth).
What did Westpac do?
The court found that the big bank made calls or written communications to customers that had an existing Westpac superannuation account.
The Westpac consultants involved were only authorised to provide “general advice” and not “financial product advice,” but the court found that recommendations were made to that effect.
Callers opened by telling customers it was a “courtesy call” to help them “potentially save on fees”, sought information on the customer’s personal circumstances, uncovered the customer’s motivations, and leveraged this to convince the customer to roll over external super funds to their existing BT account.
In the Federal Court judgement, Gleeson said Westpac’s campaign “was admittedly self-interested and did not necessarily promote the best interests of the customers but the approach did not draw the customers’ attention to either of those matters”.
Bottom line
It’s correct that it’s in a customer’s best interests to consolidate their super funds. But Westpac consultants had no idea whether it was in the customers’ interest to have super funds rolled into the Westpac one specifically.
In doing so, “Westpac focussed on its own interests and did not seek to act in the best interests of its customers,” Gleeson stated.
A case management hearing will be held on 7 February 2019.
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