Westpac Banking Corporation Fined A$26m for Customer Hardship Delays
Westpac Banking Corporation, one of Australia’s leading financial institutions, has been ordered to pay a civil penalty of A$26m ($19m). The Federal Court found the bank guilty of failing to handle customer hardship applications within the legal timeframes. The decision was issued by Justice McEvoy, who determined that the bank did not respond on time to more than 200 online requests between 2017 to 2023.
Bank’s Response to the Decision
In response to the court’s decision, a spokesperson for Westpac acknowledged the verdict and offered an apology to the customers affected. The bank expressed deep regret for letting down their customers and pledged to make amends. Westpac self-reported these issues in 2022 and 2023, and to rectify the situation, it has initiated a remediation program. This programme includes fee refunds, debt waivers, and payments for non-financial losses.
Customers Affected
The customers affected by this delay were not just from Westpac, but also from St George Bank, Bank, and Bank of Melbourne. These were people under significant financial pressure, struggling to keep up with their repayments on various products including mortgages, credit cards, personal loans, and vehicle finance.
Message to Westpac and Other Lenders
Sarah Court, the ASIC Deputy Chair, stated that this court outcome serves as a stern message to Westpac and other lenders to improve their handling of hardship requests from customers. Some customers received responses weeks after the legal deadline, while others did not receive any response at all.
Westpac has since vowed to enhance its processes and upgrade its online hardship systems to meet customer expectations. The bank stated, “Over the period in question, Westpac received approximately 695,000 requests for hardship assistance. We take our obligations seriously and have taken action to ensure we help our customers when they need it most.”
Penalty and Remediation
Westpac had proposed a penalty of A$10 million, but this amount was rejected by Justice McEvoy as being derisory and wholly inappropriate under the circumstances. The bank admitted the contraventions during the case and has since paid over A$1.7 million to affected customers in remediation. This sum includes reimbursement of fees and interest as well as compensation for non-financial harm.
Impact on Vulnerable Customers
In his reasoning, McEvoy noted that Westpac’s contraventions were very serious as they impacted many vulnerable customers over an extended period. He emphasized that these customers were the very ones that hardship provisions were designed to protect and that Westpac’s conduct significantly undermined these legislative schemes.
This article provides an example of how financial institutions need to ensure they uphold their obligations and provide timely responses to customer hardship requests. It underscores the importance of regulatory compliance and the potential consequences of contraventions.
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