One of Australia’s leading financial services providers, Westpac Banking Corporation to pay a $1.5 million penalty for mis-selling consumer credit insurance, the Australian Securities and Investments Commission (ASIC) recently confirmed in an announcement.
According to the details shared by ASIC, the Australian financial services provider issued consumer credit insurance policies to 141 customers who did not request the product. The mentioned selling happened between April and July 2015.
Westpac debited the payments from the credit cards of customers. The Federal Court mentioned that the customers were not liable to pay them as the financial services firm did not have the right to debit the payments.
“ASIC has identified consumer credit insurance to be a poor value product that leads to poor outcomes for consumers. In this case, customers were charged for insurance policies they had not agreed to buy and therefore were unlikely to use. The sale of these products benefitted the bank and not the consumer,” commented ASIC’s Deputy Chair, Sarah Court.
ASIC recently announced a 10-year ban on Mark Babbage from providing financial or credit-related services.
Penalties
ASIC has ramped up its efforts significantly since the start of 2021 to counter illegal financial activities under its jurisdictions. During the second half of 2021, the commission imposed more than $63 million in civil penalties, approved by the courts.
"ASIC has secured $270 million in remediation across the sector for consumers harmed by the sale of consumer credit insurance. The industry is now clearly on notice as to the consumer harm associated with the mis-selling of these products, and under the new penalty regime ASIC will be seeking significantly increased penalties for misconduct of this kind,” Sarah added.
According to ASIC, Westpac admitted that it failed to comply with financial services laws under s912A(1)(c) of the ASIC Act.
