Australia’s corporate regulator has hit one of Australia’s biggest banks, Westpac, with court action over claims it engaged in “widespread compliance failures” that affected thousands of customers.
The Australian Securities and Investments Commission (ASIC) has filed civil proceedings against Westpac in the Federal Court, alleging the bank:
Charged more than $10 million over a decade in advice fees to 11,000 deceased customers for financial advice services that were not provided
Distributed duplicate insurance policies to more than 7,000 customers for the same property, meaning customers paid for two or more insurance policies
Sold consumer credit card and flexi-loan debt to debt purchasers with incorrect interest rates
Charged insurance premiums that included commission payments, despite commissions having been banned under the Future of Financial Advice reforms
Did not have appropriate processes to manage accounts held in the names of deregistered companies
Charged ongoing contribution fees for financial advice to customers without proper disclosure
Eight Westpac businesses were named in court documents, including its superannuation, banking and wealth-management brands, along with its former general insurance business.
Read more: Westpac to pay $87 million back to customers
Bank to pay back $80 million
Westpac has admitted to each of the six proceedings and will pay $80 million to affected customers. ASIC and Westpac have agreed that another $20 million in penalties are appropriate, which will be submitted to the court.
ASIC deputy chair Sarah Court said it was disappointing to have to “yet again” take legal action against a major bank.
“The conduct and breaches alleged in these proceedings caused widespread consumer harm and ranged across Westpac’s everyday banking, financial advice, superannuation and insurance businesses,” she said.
“A common aspect across these matters has been poor systems, poor processes and poor governance, which is suggestive of an overall poor compliance culture within Westpac at the relevant time.
"Customers are entitled to have trust and confidence in Westpac being able to deliver what it promises, without suffering financial harm. Westpac must urgently improve its systems and culture to ensure these systemic failures do not continue.”
Westpac in hot water - again
It is not the first time Westpac has found itself under the microscope of authorities.
In 2020, it was revealed that it had underpaid about 8,000 staff members by $8 million, which it blamed on a payroll error.
In late 2019, Australia’s financial crime watchdog, AUSTRAC, initiated proceedings against the bank for more than 23 million instances of money-laundering failures. Some of those had links to child exploitation.
Earlier this year, ASIC took Westpac to court over claims it mis-sold consumer credit insurance with credit cards to customers who had not agreed to buy the policies.
The proceedings against the bank were launched on behalf of about 384 customers who were known to ASIC, however the regulator admitted it didn’t know how many customers had been affected.