The Australian Securities and Investments Commission (ASIC ) announced on Tuesday that it has brought six civil penalty proceedings against Aussie banking giant Westpac for widespread compliance failures, affecting thousands of customers.
The lapses occurred for several years across multiple business verticals that include the bank’s banking, superannuation and wealth management brands, as well as its former general insurance business.
The allegations of the regulator include charging AU$10 million to over 11,000 deceased customers for financial advice services; distributed duplicate insurance policies to over 7,000 customers, causing them to pay for these policies as well; lack of appropriate processes to manage accounts of deregistered companies; and selling consumer credit card and flexi-loan debt to debt purchasers with incorrect interest rates.
Additionally, Westpac subsidiary BT Funds Management charged members insurance premiums including commission payments, which are banned. It incorrectly charged more than AU$12 million to over 8,000 affected members.
Furthermore, Westpac licensees BT Financial Advice, Securitor and Magnitude, which is no longer operating, is accused of charging ongoing contribution fees for financial advice to customers without proper disclosure. According to estimations, at least 25,000 customers were charged over AU$7 million in fees without any disclosure.
“‘A common aspect across these matters has been poor systems, poor processes and poor governance, which is suggestive of an overall poor compliance culture within Westpac at the relevant time. 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 the ASIC Deputy Chair, Sarah Court.
Accepted the Charges
The bank has already admitted all the allegations brought by the market supervisor and agreed to compensate around AU$80 million to affected customers. Furthermore, the bank and the regulator will submit a proposal of a combined penalty of AU$100 million.
Last year, Westpac agreed to pay AU$1.3 billion in penalties to AUSTRAC for violations of anti-money laundering and terror financing obligations.
The court added: “It is unprecedented for ASIC to file multiple proceedings against the same respondent at the same time. However, these were exceptional circumstances. ASIC had numerous Westpac-related matters under investigation through the course of 2021, and we decided to expedite those matters for consideration by the Court at the earliest opportunity.”
