The corporate regulator is dragging Westpac back into the courtroom, after filing proceedings against the big bank for allegedly mis-selling policies.
The Australian Securities and Investments Commission (ASIC) has filed civil proceedings against Westpac in the Federal Court alleging it mis-sold consumer credit insurance (CCI) with credit cards to customers who had not agreed to buy the policies.
The alleged offences occurred between April and July 2015.
Westpac has not sold CCI since 2019.
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The proceedings against the bank have been launched on behalf of around 384 customers who are known to ASIC.
But ASIC said it is unsure how many customers have been affected.
Westpac has acknowledged the proceedings and said it is committed to “working constructively with ASIC through the court process”.
Addressing customer harm
The move is part of ASIC’s focus on addressing consumer harm in the insurance industry following the revelations for the Royal Commission.
So far, ASIC has returned on average $430 to over 580,000 consumers through remediation from 11 major banks and lenders.
The regulator said the sale of consumer credit insurance has consistently failed consumers and was “poor value”.
ASIC deputy chair Karen Chester said the regulators investigations, which began in 2018, has found lenders have been disappointing.
“ASIC’s deep dive investigations in late 2018 and into 2019 found lenders had disappointingly not changed policies and conduct to stem harms from the design and sale of CCI,” Chester said.
“In addition to our enforcement action, ASIC has secured over $250 million of remediation for the consumers harmed by the practices of the offending lenders.”
Chester said the regulator has been working hard to bring transparency, deterrence and rectification to consumer credit misconduct by Australian lenders.
“ASIC will continue to take action where we identify potential breaches of the law where the design and sale of financial products to consumers fails the litmus test of section 912A – efficiency, honesty and fairness,” Chester said.