Price gouging: Sneaky ways banks are ripping you off

THE big four banks are boosting their revenues by hundreds of millions of dollars a year with one sneaky trick that comes at the expense of customers.

SUPERANNUATION funds owned by the big four banks are reportedly boosting their own revenue by hundreds of millions of dollars by paying out cash returns to elderly customers at less than a quarter of the market rates.

Industry data obtained by The Australian shows that people with the Westpac-owned BT Business Super Fund who chose cash options were receiving a return of just 0.5 per cent a year.

That’s despite the five-year cash rate and the federal government five-year bond yield — both benchmarks for cash investments — having averaged 2.03 per cent and 2.48 per cent a year in that time, the newspaper reported.

Industry experts told The Australian that a systemic culture of price gouging by the big four banks and their superannuation companies were to blame for poor performance of the funds.

Figures released by the Prudential Regulation Authority show that 95 per cent of retail super funds had not delivered returns above the median for the past 10 years.

The big four banks have been accused of price gouging in the past and denied the claims, saying that comparing their super funds with others was akin to comparing “apples and oranges”.

However analysts have argued that like-for-like comparisons eliminate the variables.

By contrast, ANZ’s One Path subscribers who invested in their cash scheme received only 0.59 per cent a year on their cash investments while funds owned by NAB returned averages of just 0.5 per cent.

But according to analysts, returns on cash should be much higher than what is being paid out by the big four’s superannuation funds, mainly because those banks had the capital to invest and get better rates.

Figures from the Australian Association of Superannuation Funds of showed that superannuation funds owned by the big four banks managed around 12.3 million super accounts, holding $309 billion worth of funds.