One of the country’s largest banks has been ordered to pay a penalty of $3.25 million for misleading and overcharging customers.
Westpac admitted the breaches in a case brought against it by the Financial Markets Authority (FMA) at the Auckland High Court in December last year.
The historical breaches resulted in $6.35 million of overcharging and impacted more than 24,500 customers, including:
- Customers entitled to various benefits under Westpac’s Employee, Gold and Platinum (EGP) packages failed to receive the advertised discounts. The packages were offered between February, 2004 and November, 2021.
- Personal and business banking customers failed to receive benefits under one of Westpac’s other advertised packaged arrangements. Association packages were offered from at least January, 2012 until July, 2022.
- Westpac failed to honour agreed pricing for business customers who held a Business Transact Account. This occured between June 2011 and October 2021 when it failed to provide the correct pay-as-you-go pricing for some Business Transact Account customers.
FMA head of enforcement Margot Gatland said the issues stemmed from deficiencies in Westpac’s systems which meant the bank failed to deliver contractually agreed discounts to customers.
“Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises.”
The FMA acknowledged Westpac’s full cooperation throughout the investigation, Gatland said.
“The relationship between financial institutions and their customers must be one of trust. Customers should rightfully expect to be treated fairly and that agreements between the two parties will be honoured.”
Justice Geoffrey Venning issued a 35% discount at sentencing, noting that the bank had self-identified the issues, self-reported to the FMA and cooperated fully with its investigation.
“I accept Westpac’s submission there is no suggestion that its conduct was deliberate or wilfully misleading, nor that there was any intention to intentionally deprive customers of benefits.
But Venning added: “While it had in place systems, the systems were insufficient.”
A Westpac spokesperson said all impacted customers had been compensated and the packages were no longer offered.
“Westpac co-operated fully with the FMA’s investigation and we are pleased to have resolved the matter.”
