ASIC accused the lender of charging deceased people for financial advice services, double-charging for insurance, illegal commissions, improper fees, and selling personal debts to collectors at a higher interest rate
Westpac head office in Auckland, New Zealand. (Credit: Ingolfson/Wikipedia)
Westpac has been ordered by Australia’s Federal Court to pay A$113m ($81m) in penalties over multiple compliance failures across its businesses.
The Australian Securities and Investments Commission (ASIC) lodged six cases against Westpac’s banking, superannuation, wealth management and insurance units in November last year.
In its complaints, ASIC accused the lender of charging deceased people for financial advice services, double-charging for insurance, and collecting and paying illegal commissions.
In addition, the Australian watchdog accused the lender of not properly disclosing its fees, and selling personal debts to collectors at a higher interest rate.
The Federal Court has punished Westpac with a A$40m ($28m) fine for charging advice fees to more than 11,800 deceased customers.
ASIC deputy chair Sarah Court said: “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.”
Westpac was fined A$15m for distributing duplicate insurance policies to more than 7,000 customers for the same property at the same time, since November 2015.
The lender was fined another A$6m for charging at least 25,000 retail customers, through its advice businesses Securitor and Magnitude, for financial advice without disclosing its fees.
It was found to allow around 21,000 deregistered company accounts, holding nearly A$120m in funds, to remain open and continued to charge fees on those accounts.
The Federal Court imposed a A$20m penalty for allowing the transfer of funds from the accounts that are supposed to be remitted to ASIC or the Commonwealth.
Westpac was fined A$12m for selling consumer credit card and flexi-loan debt to debt purchasers at incorrect interest rates, which are higher than the allowed limit.
Furthermore, the lender was punished with a A$20m penalty, as its subsidiary, BT Funds Management has charged insurance premiums with commissions, despite the commissions being banned.
Westpac admitted the ASIC’s allegations in all six cases and has agreed to remediate more than A$80m to customers and cooperate with ASIC in resolving those matters.