Australia’s Westpac Bank to Pay $80.6M in Penalties, Admits Charging Dead People

By Adam Haigh | November 30, 2021

Westpac Banking Corp. agreed to pay A$113 million ($80.6 million) in penalties after the Australian regulator alleged the lender had widespread compliance failures that included charging dead people.

The case includes a claim that Westpac charged more than A$10 million in fees for financial advice to over 11,000 deceased customers over a 10-year period, according to a statement Tuesday from the Australian Securities & Investments Commission.

Westpac, in a separate statement, said it reached agreement with ASIC to resolve six separate longstanding matters with the agreed civil penalty. The bank has “substantially provisioned” for the penalties together with anticipated legal costs in its 2021 full-year results, according to the statement.

Westpac last year paid a record A$1.3 billion fine to settle Australia’s largest breach of anti-money laundering laws, a saga that cost former Chief Executive Officer Brian Hartzer his job. Scrutiny of the country’s biggest banks remains high after years of scandals and a slew of misbehavior.

‘Poor Systems’

“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,” ASIC Deputy Chair Sarah Court said in the statement.

Westpac CEO Peter King said his staff have been working to resolve and correct the problems.

“This outcome is an important step forward for us as we continue to fix issues and build stronger risk foundations,” King said in the statement.

Westpac admitted the allegations in each of the proceedings and will return approximately A$80 million to customers.

Other Allegations

Other matters filed against Westpac include these allegations:

  • Westpac distributed duplicate insurance policies to more than 7,000 customers for the same property at the same time
  • Westpac subsidiary BT Funds Management charged members insurance premiums that included commission payments, despite being banned under legislation
  • Westpac sold customer credit card and flexi-loan debt to debt purchasers with incorrect interest rates. These interest rates were higher than Westpac was contractually allowed to charge on at least part of the debts, resulting in more than 16,000 customers, who were likely to be in financial distress, being overcharged interest

Related:

Photograph: The Westpac Banking Corp. logo is displayed on a sign outside a branch in Sydney, Australia, on Tuesday, Aug. 18, 2020. Photo credit: Brent Lewin/Bloomberg.

Topics Australia

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