Westpac Banking Corporation must pay A$26m ($19m) in civil penalties after the Federal Court found it failed to deal with customer hardship applications within statutory timeframes.
The order was made by the Justice McEvoy, who found the bank did not respond on time to more than 200 online requests over a period spanning 2017 to 2023.
In a statement to Retail Banker International, the Australian bank has acknowledged the Court’s decision.
The spokesperson said: “We again apologise to any customers who were affected. We are deeply sorry we let them down.
“We self-reported these issues in 2022 and 2023 and to put things right, we’ve completed a remediation programme including refunds of fees and charges, debt waivers and payments for non-financial loss.”
The affected applications came from customers of Westpac as well as St George Bank, Bank and Bank of Melbourne.
These customers were under financial pressure and unable to keep up with repayments on products such as mortgages, credit cards, personal loans and vehicle finance.
ASIC Deputy Chair Sarah Court said the court outcome sent a clear message to Westpac and other lenders to improve how they handle requests for assistance from customers in hardship.
According to the findings, some customers received replies weeks after the legal deadline, while others received no response.
The spokesperson added: “We have strengthened our processes and upgraded our online hardship systems to meet the standards our customers deserve. Over the period in question Westpac received approximately 695,000 requests for hardship assistance. We take our obligations seriously and have taken action to ensure we help our customers when they need it most.”
Westpac had argued that a penalty of A$10 million would be appropriate, but Justice McEvoy rejected that position, saying such an amount ‘would be little more than derisory in the circumstances and therefore wholly inappropriate’.
The bank admitted the contraventions during the case and has paid more than A$1.7 million to affected customers in remediation, including reimbursement of fees and interest as well as compensation for non-financial harm.
In his reasons, McEvoy said: “I accept that Westpac’s contraventions in this case were very serious. They impacted many vulnerable customers and continued over an extended period. It may in fact be said that the circumstances faced by the affected customers means that their financial vulnerability cannot be overstated.
“As is apparent from the Banking Code of Practice, they were the very customers that the hardship provisions of the legislative scheme are designed to protect. Westpac’s conduct significantly undermined the legislative scheme.”