Two super funds into which a court has found Westpac wrongly tipped customers through a telemarketing campaign have been identified by the prudential regulator as among the poorest performers in Australia.
The BT Lifetime Super Employer Plan and BT Business Super were two of 10 into which Westpac persuaded its customers to roll their superannuation as part of a marketing campaign that brought more than $646m in deposits into the bank between 2013 and 2016.
In data comparing low-cost MySuper funds published on 10 December, the Australian Prudential Regulation Authority said both funds underperformed compared with a model investment portfolio it set up.
The BT Lifetime Super Employer Plan underperformed Apra’s model portfolio by a whopping 1.1% a year over five years while BT Business Super delivered between 0.41% and 0.43% a year over the same period.
BT Business Super also suffered from high fees that gobbled more than 2.1% a year for balances of less that $10,000 while BT Lifetime Super Employer fees ate a more modest, but still substantial 1.87% a year, the regulator said.
In October, the full federal court found that Westpac broke the law during the telemarketing campaign because it provided personal advice to people about their finances without properly considering their individual positions.
Westpac has applied to the high court for leave to appeal the judgment, adding to what is shaping as a busy year ahead in the courtroom for the bank.
Westpac is currently facing federal court action from financial intelligence agency Austrac over money-laundering and child-exploitation allegations, while another regulator, Asic, has appealed its loss in a lawsuit over responsible lending known as the “wagyu and shiraz” case.
The superannuation marketing campaign, run by a group within Westpac known as the “Super Activations” team, was designed to get customers to move super they held in accounts with other institutions into their account at the bank’s subsidiary, BT.
Bank employees phoned more than 95,000 customers during the 2013-16 period, more than 31,000 of whom agreed to roll their super into their BT account.
Some customers also received marketing material urging them to consolidate their super for the chance to win $20,000 in cash and telling them they could “could save on fees” by doing so.
“By combining all your super into your BT super account, you could stop paying multiple fees and help your super grow,” customers were told in another marketing email.
“The whole approach of Westpac was to obtain an advantage for itself without engaging with the personal circumstances of the customers so as to avoid the consequences of the responsibilities of providing personal advice,” chief justice James Allsop said in his judgment.
Justice Michael O’Bryan said that Westpac breached consumer protections contained in the Corporations Act, including the overriding obligation to act “efficiently, honestly and fairly” when providing a financial service.
“The advice it gave to its members was partial and incomplete,” he said.
“It failed to act in the best interests of its members and it failed to ensure that the financial services covered by its AFSL [Australian Financial Services licence] were provided efficiently, honestly and fairly.”
A Westpac spokesman declined to comment.
