Westpac to fork out $20m penalty for charging customers banned commissions
The bank must stump up $20m for wrongful customer charges, as the hits keep coming over its inadequate systems.
Westpac must stump up $20m in court penalties for wrongly charging commissions to more than 9,900 superannuation customers, as the hits keep coming over the bank’s inadequate systems.
The Federal Court on Friday ordered Westpac unit BT Funds Management pay the penalty for charging members insurance premiums that included commission payments, despite those commissions being banned under industry reforms in 2013. BT — via an Asgard fund — continued to charge the commissions until 2020.
Some members were also charged commissions via premiums that were paid to financial advisers, even though those customers had opted not to receive financial advice through their account.
The Federal Court also found BT misrepresented to members in their statements that proper deductions had been made, despite the commissions being banned years earlier.
“Over 9,000 Asgard Fund members were incorrectly charged commission payments totalling more than $9m. This misconduct was caused by the failure to implement proper systems to ensure consumers are correctly charged,” said Sarah Court, the Australian Securities and Investments Commission’s deputy chair.
“As the court finalises these matters against Westpac, we urge Westpac, and other financial institutions, to look at their culture of compliance and invest in systems that mean incorrect charging of fees, premiums and commissions does not occur.”
The latest ruling against Westpac reflects one of six civil penalty proceedings the corporate regulator filed against Westpac in November, with this matter the first to receive judgment.
ASIC’s statement said Westpac had indicated it will pay more than $9.8m in compensation to more than 9,900 superannuation members by July.
In its judgment the Federal Court found BT contravened the Corporations Act and the ASIC Act.
The Australian Prudential Regulation Authority was co-ordinating with ASIC in its own inquiries into Westpac’s conduct.
The big four banks have all been the subject of billions of dollars in remediation payments to customers, due to poor conduct and systems that often led to customers being wrongly charged or treated. Many cases of misconduct were fleshed out at the Hayne royal commission in 2018.
Westpac’s poor compliance systems also saw it pay a record $1.3bn fine to financial crimes regulator Austrac in 2020, as a result of millions of breaches of anti-money laundering laws. The conduct included Westpac inadvertently facilitating payments to fund child exploitation.
Earlier this week, Westpac was hit with $1.5m in penalties for charging customers for credit card insurance they didn’t want.
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