How an industry fund has piled in on an AMP class action

Major industry superannuation fund, HESTA has confirmed that it is party to class actions against AMP Limited, the Commonwealth Bank and against Westpac.

The big health industry superannuation fund has revealed a list of 21 class actions in which it is participating, with the AMP action being prosecuted by Maurice Blackburn and involving allegations that AMP Trustees and AMP Group “contravened a number of statutory and/or general law obligations which resulted in AMP members being overcharged administration fees for an extended period of time”.

The Commonwealth Bank class action relates to legal proceedings brought against the bank by AUSTRAC while the Westpac class action also relates to AUSTRAC and anti-money laundering and counter terrorism financing breaches.

Explaining its involvement in the class actions, HESTA said that it had a “primary duty to advance its members’ retirement outcomes”.

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“In the context of class actions, this means seeking to maximise recovery of the losses of its members in an economical manner,” it said.

“In assessing whether to participate in a class action, HESTA considers, among other things, the potential amount that HESTA may recover, the internal costs associated with participating in such class actions (to ensure that they exceed the potential recoverable amounts), the terms of the applicable funding documents and law firm engagement, and the track record of the funder and law firm.

“Given that HESTA, as an Australian superannuation fund, is investing on behalf of its members, HESTA considers any recovery of amounts on behalf of its members as beneficial to preserving the retirement savings of its members, provided, of course, that such recovery amounts exceed the costs of HESTA participating in such litigation,” it said.

Queensland Liberal backbencher, Bert Van Mannen, had asked HESTA to provide details of the 21 class actions it was presently involved in. He also asked whether the fund was “concerned about the vastly increasing cost of directors liability insurance as a result of the significant increase in shareholder class actions? And are you concerned that, as a result, the quality of the people who might seek to take on directorships, given the increasing level of risk involved, might in fact, over time, decline and therefore you're getting worse outcomes for your members investments in those said companies?”

HESTA said it understood the concern with respect to the growing cost of directors and officers liability insurance.

“However, such a concern must be balanced against the importance of allowing security holders to pursue class actions and being able to recover losses in circumstances where individual claims are not economically viable,” it said.

“HESTA agrees with the need to avoid spurious class actions which may contribute to the growing cost of directors and officers’ liability insurance. However, if legitimate class actions were materially impeded due to concerns regarding the growing cost of directors and officers’ liability insurance, HESTA considers that this may impact the ability of securityholders to access justice and unnecessarily tip the balance in favour of companies and management.”