ASIC has commenced six civil penalty proceedings against Westpac in the Federal Court, alleging widespread compliance failures across multiple Westpac businesses over many years, affecting thousands of consumers.
Westpac has admitted the allegations and has agreed to remediate approximately $80 million to customers.
The Westpac businesses against whom the allegations are made include its banking, superannuation and wealth management brands as well as Westpac’s former general insurance business.
Commenting on the corporate regulator's unprecedented number of charges against one entity, ASIC deputy chair Sarah Court said ASIC had numerous Westpac-related matters under investigation through the course of 2021 and decided to expedite those matters for consideration by the court at the earliest opportunity.
“ASIC is disappointed to have to yet again commence legal proceedings, on this occasion no fewer than six times, against a major bank," said Ms 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.”
Following separate investigations into each matter, ASIC uncovered “poor systems, poor processes and poor governance” at the bank, which, it said, are suggestive of an overall poor compliance culture within Westpac.
“Customers are entitled to have trust and confidence in Westpac being able to deliver what it promises, without suffering financial harm. Westpac must urgently improve its systems and culture to ensure these systemic failures do not continue,” said Ms Court.
ASIC and Westpac are set to submit to the court that combined penalties of more than $100 million are appropriate.
Each matter will now be separately considered and determined by the court.
Six matters detailed
ASIC alleges that Westpac, over a 10-year period, charged over $10 million in advice fees to over 11,000 customers for financial advice services that were not provided due to their death.
Moreover, according to the corporate regulator, Westpac distributed duplicate insurance policies to over 7,000 customers for the same property at the same time, as well as issuing insurance policies to 329 customers who had not consented to entering an insurance policy.
ASIC also found that Westpac subsidiary BT Funds Management charged members insurance premiums that included commission payments, despite commissions having been banned under the Future of Financial Advice reforms. BT Funds is remediating over $12 million to over 8,000 affected members who were incorrectly charged.
Matter four alleges that Westpac licensees BT Financial Advice, Securitor and Magnitude charged ongoing contribution fees for financial advice to at least 25,000 customers without proper disclosure. It is estimated that over $7 million in fees that had not been disclosed, or adequately disclosed, were charged.
The big four also allegedly allowed some 21,000 deregistered company accounts to remain open, continuing to charge fees on these accounts and allowing funds to be withdrawn.
And finally, ASIC alleges that Westpac sold consumer credit card and flexi-loan debt to debt purchasers with higher than allowed interest rates, resulting in more than 16,000 customers, who were likely to be in financial distress, being overcharged interest. Westpac and/or the debt purchasers have refunded over $17 million to affected customers.
The full list of Westpac businesses against which the allegations are made are:
- Westpac Banking Corporation
- Advance Asset Management Limited
- Asgard Capital Management Limited
- BT Funds Management Limited
- BT Funds Management No. 2 Limited
- BT Portfolio Services Limited
- Securitor Financial Group Pty Limited
- Magnitude Group Pty Limited
Maja Garaca Djurdjevic
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
