The Financial Markets Authority (FMA) and Commerce Commission have formally agreed with Westpac the steps the bank must take to refund fees to some 93,000 customers being overcharged $7 million.
Westpac did not correctly discount fees on a number of different banking packages and self-reported the issue to the FMA and Commerce Commission in December 2017. It identified more impacted customers over the following 12 months.
The bank has agreed to refund all fees and charges that have been incorrectly charged and will take all reasonable steps to reach impacted customers.
The FMA was notified of the issue because of potential breaches of the fair dealing provisions of the Financial Markets Conduct Act (FMCA). The Commerce Commission was also involved because of possible breaches relating to consumer credit contracts under the Fair Trading Act (FTA).
Westpac accepted that it may have contravened one or both of the Acts.
It is understood that Westpac has already completed a significant part of the work to reach and refund impacted customers. The process for remediation is contained in an Enforceable Undertaking that Westpac has agreed to give the FMA and the Commerce Commission. The undertaking confirms that Westpac will notify the FMA when it has completed this process.
Liam Mason, FMA Director of Regulation, said: “The Enforceable Undertaking illustrates that regulatory requirements are working as Westpac recognised its possible breaches and approached us and the Commerce Commission. This is the kind of proactive behaviour we expect to see from market participants.”
Anna Rawlings, Commerce Commission Chair, said: “The Commission also encourages the identification and self-reporting of conduct like this and appropriate remediation for affected customers. We emphasise the importance of robust systems and sound monitoring practices to help avoid errors, and to quickly identify and fix them if they occur.”
Two Enforceable Undertakings were signed on the same matter – one between the FMA, the Commerce Commission and Westpac under the FMCA and FTA, and another between only the FMA and Westpac under the FMCA.
In December 2017, Westpac self-disclosed to the FMA and the Commerce Commission that there was an issue around the discounting of fees for some customers. Westpac did not apply discounts appropriately, impacting 61,000 customers to a value of approximately $1.28 million.
Westpac said it planned to refund all fees incorrectly charged. The bank said it would also improve its systems and start a wider review to ensure customers were receiving appropriate discounts.
In December 2018, Westpac notified the FMA and Commerce Commission that it had identified similar issues with another 32,000 customers, with around $5.7 million inappropriately charged.
The affected banking packages included the Tertiary Pac, Career Starter Pac, Graduate Pac, International Student Pac, Relationship Rewards Scheme, Family Benefits and Westpac Staff Package, Bizpac, and Government Packages and Portfolio Package.