Yahoo Finance Westpac admits it broke law and agrees to pay $113m in penalties
Asic hit bank with six lawsuits over shoddy treatment of customers – including charging dead people fees
Westpac has admitted it broke the law and agreed to pay penalties totalling $113m after the corporate regulator hit the bank with six lawsuits over shoddy treatment of customers that included charging dead people fees and lambasted the bank for a “poor compliance culture” that needs urgent improvement.
The bank has admitted the allegations in the lawsuits, filed in the federal court by the Australian Securities and Investments Commission, and in addition to the penalty will pay customers $80m in remediation.
Tens of thousands of customers were improperly charged tens of millions of dollars as a result of Westpac’s misconduct, Asic said.
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It is the latest regulatory blow for the bank, which in September last year agreed to pay a record $1.3bn fine to settle legal action over allegations of non-compliance with money laundering and child exploitation regulations levelled against it by the financial intelligence agency, Austrac.
In 2018 the bank was fined $3.3m for unconscionable conduct by trying to rig the benchmark bank bill swap rate.
It also sparked political controversy over a lawsuit Asic brought against it over responsible lending, dubbed the “wagyu and shiraz” case, that it won.
Asic’s commissioner, Sarah Court, said it was “unprecedented for Asic to file multiple proceedings against the same respondent at the same time” and the regulator was “disappointed” that it continued to have to take big banks to court.
“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.
“Westpac must urgently improve its systems and culture to ensure these systemic failures do not continue.”
Westpac’s chief executive, Peter King, said the bank had “fallen short of our standards and the standards our customers expect of us”.
“The issues raised in these matters should not have occurred, and our processes, systems and monitoring should have been better. We are putting things right and unreservedly apologise to our customers.”
The $113m penalty has been agreed to between Asic and Westpac but is subject to approval by the court.
Asic’s litigation showbag includes allegations Westpac charged more than 11,000 dead people more than $10m in fees, charged 7,000 people for two insurance policies over the same property, collected $12m in illegal commissions from 8,000 people, failed to properly disclose $7m in fees it charged to 25,000 customers, kept 21,000 accounts open for companies that no longer existed and on-sold debts to collectors at rates higher than it was allowed to charge.
It comes as Asic is under pressure over its decision to drop the phrase “why not litigate” from its corporate plan in favour of focusing on economic recovery from the Covid-19 recession. The phrase was inserted after the financial services royal commission criticised Asic over its lack of enforcement action against the banks.
Despite the large fine, Westpac has escaped more severe regulatory action. In relation to charging the dead fees, the bank has admitted that the ways it broke the law included accepting payment without intending or being able to supply as ordered, as well as unconscionable conduct and continuing to charge a fee once an agreement has come to an end.
And in relation to the double charging of insurance premiums, Westpac has admitted to breaches including making false or misleading representations.
Westpac’s wealth management subsidiary, BT, admitted to misleading or deceptive conduct by filching illegal commissions from super fund clients.
Westpac has acknowledged that financial advice subsidiaries Magnitude Group and Securitor, both of which closed down in 2019, broke the Corporations Act by failing to provide financial services efficiently, honestly and fairly.
Keeping 21,000 business accounts open even though the companies that held them had been deregistered allowed Westpac to keep charging fees. It also allowed transactions on the accounts, which held tens of millions of dollars that should have been vested with the commonwealth.
Westpac has also admitted to making false or misleading statements by selling the debts of 17,000 customers, many of whom were likely to be in financial distress, to collection agencies at interest rates above what it was entitled to charge.
