The Westpac Banking Corp (ASX: WBC) share price has pushed higher on Friday despite advising that it has been hit with a class action.
At the time of writing the banking giant's shares are up 0.5% to $28.67.
What is the class action?
This morning the bank confirmed that it has received a class action filed against its subsidiary companies, BT Funds Management and Westpac Life Insurance Services, in relation to aspects of BT Funds Management's BT Super for Life cash investment option.
According to the release, the claim has been filed by Slater & Gordon Limited (ASX: SGH) on behalf of thousands of superannuation members who were allegedly short-changed by the bank's super funds.
This is the third class action to be filed as part of the law firm's Get Your Super Back campaign, which was launched off the back of the Banking Royal Commission.
The case alleges that BT has been short-changing its members who invested in the BT Super for Life cash-only option by investing through Westpac Life and allowing it to earn substantial fees for providing no valuable service.
Rather than investing member funds directly, BT chose to use Westpac Life as an intermediary, who then invested the money in an externally managed cash fund.
Special Counsel Nathan Rapoport said: "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."
"In recent years Westpac Life actually achieved reasonable returns on members' money, but the arrangement meant that it kept much of that benefit for itself. One year, Westpac Life earned returns of around 2.5 per cent, but it delivered an interest rate of only 1.3 per cent to members. 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 added.
Westpac advised that the damages sought by the claim are unspecified and it intends to defend the claims.
