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Westpac faces civil proceedings
The corporate regulator has commenced civil penalty proceedings against Westpac alleging the big four bank used misleading and unfair sales of consumer credit insurance.
Westpac faces civil proceedings
The corporate regulator has commenced civil penalty proceedings against Westpac alleging the big four bank used misleading and unfair sales of consumer credit insurance.
ASIC alleges that between 7 April 2015 and 28 July 2015, Westpac mis-sold consumer credit insurance (CCI) with cards and other credit facilities to customers who had not agreed to buy the policy.
The crackdown follows ASIC’s announcement last year that its work had led to over $160 million in remediation for consumers sold junk CCI by lenders, including Westpac.
ASIC deputy chair Karen Chester said ASIC’s deep-dive investigations in late 2018 and into 2019 found lenders had disappointingly not changed policies and conduct to stem harms from the design and sale of CCI.
“In addition to our enforcement action, ASIC has secured over $250 million of remediation for the consumers harmed by the practices of the offending lenders,” Ms Chester noted.
“The CCI remediation program covers 11 major banks and other lenders and has returned on average over $430 to over 580,000 consumers,” she explained.
According to ASIC, the credit card provider also asserted rights to payment for the CCI premiums, which customers were not liable to pay, as well as failed to ensure that its financial services were provided efficiently, honestly and fairly when it supplied CCI to customers who had not agreed to acquire CCI and debited premiums from those customers’ accounts.
ASIC is seeking declarations and pecuniary penalties from the Federal Court. A case management hearing is yet to be scheduled.
CBA to pay $7m penalty
The allegations into Westpac follows the Federal Court ordering the Commonwealth Bank of Australia (CBA) to pay a $7 million penalty after declaring the bank guilty of making false or misleading representations and engaging in misleading and deceptive conduct.
These declarations related to 12,119 occasions when CBA charged a rate of interest on business overdraft accounts substantially higher than what its customers had been advised.
The rate, which customers were advised would be 16 per cent per annum in most cases, was said to rocket to around 34 per cent per annum.
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