Westpac New Zealand has admitted to overcharging more than
24,000 customers approximately NZ$6.35 million through systematic failures in
its discount and benefits programs, according to court proceedings initiated by
the Financial Markets Authority (FMA).
Westpac NZ Faces Court Over $6.35M Customer Overcharging Scandal
The bank acknowledged making misleading representations to
customers through its Employee, Gold and Platinum packages, as well as other
business banking services. The violations occurred due to manual processing
errors and inadequate system controls that failed to properly apply advertised
discounts.
“Westpac’s issues stemmed from deficiencies in its systems
that meant the bank failed to deliver to them contractually agreed discounts,” FMA
Head of Enforcement, Margot Gatland, said.
„Westpac used preferential pricing to attract and retain customers, without
having systems that could reliably deliver on those promises.”
The bank’s internal processes relied heavily on manual
record-keeping, with staff required to manually note customer eligibility for
package benefits. This flawed system resulted in up to 31% of eligible
customers not receiving their entitled discounts on subsequent products and
services.
Impact on Business Customers
Small business clients holding Business Transact Accounts
were particularly affected by incorrect charge codes, leading to higher
maintenance fees and missed transaction fee waivers. Account statements
incorrectly displayed these inflated charges as legitimate fees.
“The FMA acknowledges Westpac’s full cooperation throughout
the FMA’s investigation, and the work it undertook to remedy the issues,”
commented Gatland.
Westpac Faces Regulatory Challenges in Oceania
Westpac Banking Corporation has faced significant regulatory
penalties in recent years. In 2020, the Australian Transaction Reports and
Analysis Centre (AUSTRAC) announced an agreement with the bank to impose a $1.3
billion penalty for breaches of the Anti-Money Laundering and Counter-Terrorism
Financing Act 2006 (AML/CTF Act). AUSTRAC highlighted that the fine reflects
the severity and scale of Westpac’s compliance failures.
More recently, in January 2024, the Australian Federal Court
ordered Westpac to pay a $1.8 million penalty for engaging in unconscionable
conduct during a $12 billion interest rate swap transaction in October 2016.
This transaction, the largest in Australian financial market history, involved
a consortium of AustralianSuper and IFM entities acquiring a majority stake in
Ausgrid from the New South Wales Government.
This article was written by Damian Chmiel at www.financemagnates.com.
Source link
