Westpac fined $113 million for “profound failure over many years”
Westpac has been ordered to pay $113 million in penalties over charges of widespread compliance failures across multiple businesses, including Westpac’s banking, superannuation, wealth management and insurance brands. In the last of six separate civil penalty proceedings filed by ASIC, Justice Beach of the Federal Court of Australia penalized Westpac $40 million for charging advice fees […]
Westpac has been ordered to pay $113 million in penalties over charges of widespread compliance failures across multiple businesses, including Westpac’s banking, superannuation, wealth management and insurance brands.
In the last of six separate civil penalty proceedings filed by ASIC, Justice Beach of the Federal Court of Australia penalized Westpac $40 million for charging advice fees to over 11,800 deceased customers.
“Profound failure by Westpac over many years”
The six matters against Westpac relate to:
- “fees for no service – deceased customers”, in which Westpac charged over $10.9 million in advice fees over 10 years to more than 11,800 deceased customers for financial advice services that were not provided due to their death. Westpac was fined $40 million.
- “general insurance”, in which Westpac distributed duplicate insurance policies to over 7,000 customers for the same property at the same time. Westpac was fined $15 million.
- “inadequate fee disclosure”, in which Westpac’s advise business charged ongoing contribution fees for financial advice to over 25,000 retail customers without disclosing, or properly disclosing those fees, having charged at least $10.6 million. Fine: $6 million.
- “deregistered company accounts”, in which Westpac allowed approximately 21,000 deregistered company accounts, holding approximately $120 million in funds, to remain open and continued to charge fees on those accounts. Fine: $20 million.
- “debt onsale”: Westpac sold consumer credit card and flexi-loan debt to debt purchasers with incorrect interest rates, resulting in more than 16,000 customers being overcharged interest. Fine: $12 million.
- “insurance in super”, in which Westpac’s BT Funds Management charged 9,900 members with premiums that included commission, despite having been banned under the Future of Financial Advice reforms. Fine: $20,000 million.
ASIC Deputy Chair Sarah Court commented: “The breaches found by the Court in these six cases demonstrate a profound failure by Westpac over many years and across many areas of its business to implement appropriate systems and processes to ensure its customers were treated fairly. Westpac, like all licensees, has an obligation to be honest and fair in its provision of financial services. Despite this, Westpac failed to prioritise and fund the systems upgrades necessary to help fulfil this obligation.
“Over the course of 13 years, more than 70,000 customers have been affected by these failures, either by being incorrectly charged or given the wrong information. The sheer scale of this impact suggests that, at the time, Westpac had a culture that did not prioritise compliance. The Financial Services Royal Commission gave prominence to many of these issues across the banking industry and saw law reforms introduced to prevent harm, but Westpac’s misconduct, including the charging of advice fees to deceased customers, continued.
“Consumer harm caused by systems failures is unacceptable. Financial institutions must invest in systems that allow them to meet their obligations to customers. ASIC expects the industry to do this work quickly and efficiently. Consumers are entitled to be confident that the compliance systems of the financial services firms they trust with their financial security are up to standard. Across all six matters, Justice Beach noted that systems and compliance failures were a common feature and the misconduct by Westpac was considered serious. Regarding the charging of deceased customers, Justice Beach commented that Westpac and the related entities ‘utterly failed to address the issues systematically”.