Westpac Faces $83 Million Fine for Several Lapses

Westpac, a major Australian bank and financial services provider, has been ordered by a federal court to pay a penalty of AU$113 million (around $82.9 million) for compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term failures across multiple business units.

Announced on Friday, the court decision came on six separate civil proceedings against the bank filed by the Australian financial market supervisor, ASIC, last November.

Systemic Lapses

The major compliance breaches by the bank include charging advice fees to over 11,800 deceased customers for financial advice services and distributing duplicate insurance policies to over 7,000 customers. For the first, it was penalized with AU$40 million, whereas it need to pay $15 million for the other offense.

Additionally, the bank charged ongoing contribution fees for financial advice to retail customers without any proper disclosure. In the past eight years, it charged at least AU$10.6 million to more than 25,000 customer accounts without providing any disclosure. For this, the bank has been penalized to pay AU$6 million.

Further, Westpac allowed around 21,000 deregistered company accounts with AU$120 million in fund holdings to remain open. These funds should have been remitted to ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term or the Commonwealth, but the bank allowed withdrawals. The court found that the bank was aware of its system flaws but did not fix them and continued to benefit from them. Now, it needs to pay AU$20 million for this lapse.

In addition, the court slapped further AU$12 million and AU$20 million penalties separately for debt on sale and insurance superannuation lapses, respectively.

“The breaches found by the Court in these six cases demonstrate a profound failure by Westpac over many years and across many areas of its business to implement appropriate systems and processes to ensure its customers were treated fairly,” said ASIC’s Deputy Chair, Sarah Court.

“Consumer harm caused by systems failures is unacceptable. Financial institutions must invest in systems that allow them to meet their obligations to customers.”

Meanwhile, Westpac is not a stranger to such hefty fines for non-compliance measures. In 2020, the bank agreed to pay AU1.3 billion as a fine for several non-compliance allegations brought by ASIC.