Westpac apologies for overcharging 25,000 New Zealand customers $6.35m

A major bank has apologised to thousands of its customers who were impacted by an error that led to them being massively overcharged.

Major bank Westpac has apologised after overcharging its New Zealand customers by more than $6m, by not giving them advertised benefits on a range of products.

Westpac’s New Zealand division has admitted to overcharging $NZ6.35m across nearly 25,000 customers across a number of key business areas.

According to the civil proceedings by New Zealand’s Financial Markets Authority (FMA) launched, the bank failed to deliver advertised benefits for various banking packages across its personal and business portfolios.

Westpac New Zealand has apologised to 25,000 customers who did not receive their full entitlements. Picture: NewsWire / Simon Bullard.

The ASX-listed bank, which is also the third largest bank in New Zealand, accepted it made a misrepresentation in a number of historic issues including benefits for employees, gold and platinum members.

According to the statement by the FMA, Westpac’s error led to 31 per cent of eligible customers being overcharged.

The overcharges were recorded in customers’ account statements (for account and card benefits) and/or their policy schedules and annual renewal letters (for insurance benefits).

The FMA also alleged personal and business banking customers failed to receive benefits under one of Westpac’s other advertised packaged arrangements, and that Westpac failed to honour agreed pricing for business customers who held a Business Transact Account.

In a statement, Westpac said: “The matter relates to historical issues where we did not deliver benefits fully to some customers under two types of product packages (Employee, Gold and Platinum Packages and Association Packages), and some incorrect pricing for some customers who had Business Transact Accounts.

“Westpac self-reported these issues to the FMA and has been providing updates to them in relation to customer remediation as well as co-operating with their investigation,” a Westpac Spokesperson said.

The bank said their were deficiencies in its system Picture: NewsWire / Simon Bullard.

FMA head of enforcement, Margot Gatland, said: “Westpac’s issues stemmed from deficiencies in its systems that meant the bank failed to deliver to them contractually agreed discounts. Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises.”

The FMA and Westpac have agreed to resolve the proceedings on terms acceptable to all parties.

A penalty hearing before the High Court will take place in due course.

“The FMA acknowledges Westpac’s full co-operation throughout the FMA’s investigation, and the work it undertook to remedy the issues,” Ms Gatland concluded.

Originally published as Westpac apologies for overcharging 25,000 New Zealand customers $6.35m