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ASIC fails to act in Westpac scandal

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Westpac-BT has been gouging superannuation accounts while ASIC remained ignorant (Image by Dan Jensen)

Despite being aware of the Westpac superannuation gouging scandal, ASIC failed to take any action resulting in the loss of billions in super funds. Anthony Klan continues his report.

THE CORPORATE REGULATOR has taken zero action to stop Westpac’s wholesale gouging of superannuation accounts since it was formally alerted to the scandal over six months ago — costing over 900,000 Australians almost $1 billion in that time.

The ongoing gouging by Westpac-BT is now costing its 915,000 members about $1.65 billion a year, or $4.49 million a day, seven days a week, analysis shows.

It has further emerged that the person responsible for taking action to stop the gouging by Westpac-BT was formerly an “in-house” lawyer at Westpac.

Jane Eccleston, the senior executive at the Australian Securites and Investments Commission (ASIC) responsible for superannuation, previously worked at Westpac as ‘in-house counsel for Westpac Banking Corporation’, ASIC’s website states.

The ongoing refusal by ASIC – which recently lost its chair and deputy chair in a corruption scandal – to take action is particularly remarkable, given ASIC’s deputy chair, Karen Chester, is intimately aware of the problem.

Immediately before joining ASIC, Chester was deputy chair of the Productivity Commission where she headed the Commission’s multi-million dollar, three-year study into the ‘efficiency and competitiveness’ of Australia’s superannuation system.

That review found widespread problems in the super system, mainly due to so-called “retail” funds – such as Westpac-BT – gouging vast sums of money from members.

Chester’s three-year review said those problems were caused by inadequate ‘governance and regulation’.

Regulators ‘focus too much on the interests of funds and not members,’ Chester’s review says.

The revelations of ASIC’s latest failure come just over a week after the Your Future, Your Super legislation – allegedly aimed at reducing gouging in the sector – passed the Senate.

Those changes include super funds being “stapled” to each member, so a new fund isn’t opened each time a person switches jobs (although funds can still be proactively changed at any time).

Existing laws already prohibit the gouging of super funds — under the Superannuation Industry (Supervision) Act (1993), super trustees must act in the ‘best interests’ of their members or face serious penalties, including up to two years gaol.

However, in order for those penalties to actually be imposed by a judge – that is, for the laws to actually work – ASIC must first instigate action.

It consistently refuses to do so.

ASIC was formally alerted to the scandal by The Klaxon in writing on 23 November last year.

That was over seven months ago.

Three days earlier, on 20 November, The Klaxon had revealed that Westpac-BT had gouged over $8 billion from the life savings of almost one million Australians in the decade to 2018.

The gouging occurs via a complex web of obscure paper companies, many of which generate huge fees despite many performing no real service and having zero employees, the investigation revealed.

The story, deeply relevant to more than 900,000 Australian workers and retirees, ultimately ran in The Klaxon in November last year (Source: The Klaxon, Westpac and BT accounts)

The deeply improper practices meant the 900,000-plus members in the Westpac-BT “Retirement Wrap” superannuation fund made almost nothing on their investments in the entire decade from 2008-2018, despite very strong growth in investment markets.

(Retirement Wrap is an “umbrella” fund — if you have super with Westpac/BT, regardless of the name of your particular “product”, you’re most likely within the Retirement Wrap fund.)

The revelations had been slated to run as a major expose in The Australian newspaper in mid-2018, however then editor (now managing editor) John Lehmann inexplicably killed the story and prevented it from running.

Westpac, BT, nor anyone else has ever identified a single error in the article.

At the time the story was spiked – midway through the Royal Commission into banking – Westpac was providing large amounts of money to the newspaper. 

On Thursday, The Klaxon revealed that in just two years – from mid-2018, when Lehmann spiked the story and mid-2020 – Westpac-BT gouged an additional $3.29 billion.

Average returns for Westpac-BT’s 900,000-odd Retirement Wrap members were 1/30th of actual market rates.

Missing: $3.29 billon gone in just two years as Westpac-BT super returns almost non-existent (Source: The Klaxon, APRA, RBA)

By the end of this financial year, those losses will total $5 billion.

For the 2018-19 and 2019-20 financial years, losses were $1.53 billion and $1.75 billion respectively, totalling $3.29 billion. That equates to losses due to gouging of about $1.65 billion a year, or $4.49 million a day, every day, 365 days a year.

Just since November last year when the exposé was ultimately published in The Klaxon – and when ASIC was formally alerted to the situation – around $960 million more has been gouged from 915,000 Westpac-BT super accounts.

The exposé was the biggest scandal to face Westpac since its CEO Brian Hartzer and Chair Lindsay Maxsted were ousted when it emerged in 2019 that Westpac had been facilitating child rape.

Yet ASIC has still failed to take any action whatsoever.

Superannuation fund “trustees" are the people responsible for looking after members and ensuring their funds aren’t stolen, gouged or otherwise misappropriated.

In the case of Westpac-BT, it is the trustees that are permitting and facilitating the ongoing wholesale gouging of members’ funds.

That the person responsible for policing superannuation trustees in Australia, Eccleston, is herself a former in-house lawyer for Westpac, makes ASIC’s complete failure to act regarding Westpac’s super gouging even more serious.

Eccleston’s bio states she has a history in corporate law.

The bio states:

‘Before joining ASIC, Jane was a senior associate with Mallesons Stephen Jaques (now King and Wood Mallesons), working within the Corporate/Mergers and Acquisitions team. She has also worked as in-house counsel for the Westpac Banking Corporation.


Jane holds honours degrees in Law and Psychology from the University of Sydney.’

Westpac is currently trying to “sell” its BT super arm, which has been reported to have a “value” of $1 billion or more.

That “value” is derived solely from the money BT takes from the accounts and returns of its members.

What Westpac is selling is the ability for some other party to continue gouging those 900,000-plus Westpac-BT super members.

On Friday, following The Klaxon’s latest revelations, ASIC and Chester doubled down on their inaction, refusing to provide any response.

‘Sorry, but we’ll have to decline to comment. (But thank you for the opportunity),’ ASIC national media manager Gervase Greene wrote to us in response.

No other information was provided.

The Klaxon’s questions to ASIC and Chester:

(Source: The Klaxon)

ASIC and Chester’s response:

(Source: The Klaxon)

It was the same story in November last year. 

The Klaxon wrote to ASIC, formally blowing the whistle on the Westpac-BT systemic gouging.

We asked whether ASIC was taking action and if not, why not?

The Klaxon’s 23 November email to ASIC:

(Source: The Klaxon)

We received no response and so the following day, on 24 November, we pushed again for a response.

Later that same day, we again wrote to ASIC, specifically requesting that our questions be put to Deputy Chair Chester.

On 25 November, ASIC media spokeswoman Angela Friend responded:

‘We do not propose to comment on whether we are or will investigate the issues you have raised.


I have already alerted relevant people to your article and the issues you have raised but at this time, have nothing further to say.’

We wrote back the same day: ‘Can you please confirm Ms Chester has been alerted?’

We received no response.

On 27 November, one week after the exposé was published, we approached ASIC again, pressing the seriousness of the matter.

The Klaxon’s 27 November email:

(Source: The Klaxon)

Again, we received no response.

The $960 million more gouged by BT-Westpac since November equates to an average of just over $1,000 a member, in just seven months.

The impacts are compounded because the average Westpac-BT Retirement Wrap balance is just $77,000, which is largely due to the systemic gouging.

Chester, who receives a $620,730 taxpayer-funded annual salary, started as ASIC Deputy Chair on 29 January 2019, just weeks after her Productivity Commission super report was released on 10 January.

Chester’s final report, released less than three weeks before Chester started as Deputy Chair of ASIC, states ‘inadequate’ action by regulators (ASIC is the main regulator for superannuation).

Chester’s review says:

‘The system offers products that meet most members’ needs, but members lack simple and salient information and impartial advice to help them find the best products.


Inadequate competition, governance and regulation have led to these outcomes.


Regulations (and regulators) focus too much on the interests of funds and not members.’

Anthony Klan is an investigative journalist and editor of The Klaxon. You can follow him on Twitter @Anthony_Klan. This article was originally published on The Klaxon and has been republished with permission.

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