Finance Your Super Westpac phone campaign borderline dishonest, MP claims

Westpac phone campaign borderline dishonest, MP claims

Westpac dishonesty claim.
Westpac CEO Brian Hartzer as the bank is accused of "borderline" dishonesty in parliament. Photo: AAP
Twitter Facebook Reddit Pinterest Email

Westpac’s phone campaign to convince superannuation fund members to move to its BT-branded funds between 2013 and 2016 verged on dishonesty, according to Matt Thistlethwaite, deputy chair of the parliamentary economics committee.

Questioning Westpac chief executive Brian Hartzer before the committee on Wednesday, Mr Thistlethwaite, a Labor MP, described the bank’s actions as “borderline whether or not you’re telling the truth” in encouraging customers to close multiple super accounts and roll them into BT.

“You’re probably encouraging them to move into a fund that might make them worse off in the long term,” he told Mr Hartzer.

Mr Thistlethwaite said he was concerned that Westpac was not acting in clients’ best interests in encouraging them to move into BT because of its relatively poor performance. “APRA funds data shows that the return on the BT fund over five years was 1.4 per cent [annually] and over 10 years 2.3 per cent.”

Returns for the largest fund, Australian Super, “over five years were 4.8 per cent and 10 years 5.5 per cent”, he said.

“If you’d moved someone from that fund into the BT fund arguably you’d have left that person worse off.”

Mr Hartzer replied that the returns Mr Thistlethwaite was referring to were just part of “lots of different aspects” of decisions about super funds including “quality of insurance cover” and “different forms of super”.

When it came to investing, “past performance was not a predictor of future returns”, the bank boss said.

The Australian Securities and Investments Commission (ASIC) is taking legal action in the Federal Court against Westpac, alleging two of the bank’s subsidiaries breached “best interests” obligations and provided personal financial advice when they were not permitted to do so.

ASIC says Westpac telephone sellers gave “personal advice” to customers when encouraging them to roll their super funds into BT when they are only allowed to provide “general advice” under those circumstances.

“We disagree and are fighting it in court for that reason,” Mr Hartzer told the committee. Westpac says each client contacted was given a warning that the advice was general in nature.

Mr Thistlethwaite warned that Westpac’s action could trigger a “competitive war” with other funds, resulting in “having funds working against each other bombarding people with information that is not in their best interests. That’s why we have these laws in place and why ASIC is taking action against you”.

Mr Hartzer responded: “I’m struggling a little bit with your assertion that lots of competition is a bad thing for consumers.”

The Westpac boss admitted that the telephone super sellers were receiving commissions for calls resulting in customers rolling up their super into BT. “I believe we have changed the way sales compensation is paid but it would have had some incentives,” he said.

ASIC alleges in its case against Westpac that it:

  • failed to do all things necessary to ensure that the financial services covered by their licences are provided efficiently, honestly and fairly;
  • failed to comply with the conditions of their licences which only permits those licensees to provide general advice; and
  • failed to comply with the financial services laws in the Corporations Act.

Its case focuses on 15 conversations between Westpac sales people and customers.

View Comments