Westpac New Zealand has admitted to making “misleading representations” that resulted in $6.35 million in overcharges for customers, according to the Financial Markets Authority (FMA).
The FMA said the bank admitted in civil proceedings at the High Court in Auckland that customers entitled to benefits under its Employee, Gold and Platinum packages did not get the advertised discounts.
Personal and business banking customers did not get benefits under another of the bank’s advertised packages. The bank also failed to honour its agreed pricing for business customers who held a Business Transact Account.
These breaches of the fair dealing provisions under the Financial Markets Conduct Act 2013 affected a total of 24,621 customers.
The FMA said the the Employee, Gold and Platinum (EGP) packages offered discounts and preferential rates across Westpac’s services.
“When a customer entered into a package agreement, Westpac staff had to manually record a note in the customer’s file to confirm their eligibility for the package benefits,” the FMA statement read.
“When eligible customers subsequently acquired other products or services from the bank, Westpac had no process for staff to check whether the customer was eligible for package benefits on the subsequent products and services. There was no guidance for employees.”
The issues were “frequently overlooked” by Westpac and up to 31% of customers were overcharged, according to the FMA.
“In each case misleading pricing information was displayed to customers, implying that the benefits had been applied in circumstances that they had not.”
This issue also affected packages that the bank offered its personal and business customers.
“The result was that customers were overcharged and misled. As with the EGP Packages issue, this was recorded by Westpac in misleading account statements,” the FMA said.
“The issue affected up to 43% of eligible consumer customers and up to 32% of eligible business customers.”
Incorrect charge codes were applied after offering agreed pricing to small business customers with a Westpac Business Transact Account.
“This occurred because of internal systems errors, which relied principally on manual processes.
“In the result, customers were overcharged because they did not receive the lower account maintenance fees that they were due and/or because fee waivers were not applied on certain transactions when they should have been.”
Statements were received by customers suggesting they were charged the correct rate when in reality they were charged more.
FMA head of enforcement Margot Gatland said the errors were due to “deficiencies in its systems” which meant the bank did not give the agreed discounts.
“Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises.
“The FMA acknowledges Westpac’s full cooperation throughout the FMA’s investigation, and the work it undertook to remedy the issues.”
A Westpac spokesperson said the bank self-reported these issues to the FMA and had been providing updates in relation to customer remediation as well as co-operation with the investigation.
“All customers impacted by the packages issue have been remediated and we have cooperated fully and openly with the FMA on their investigation.”
A penalty hearing will take place before the High Court “in due course”.
