FMA says it expects to see “proactive” self-reporting behaviour from banks
Westpac has agreed to refund 93,000 customers approximately $7 million in overcharged fees after failing to correctly discount fees on various banking packages.
Westpac self-reported the issue to the FMA and Commerce Commission in December 2017, and identified more impacted customers over the following 12 months. The regulators and the bank have now formally agreed on the steps to be taken to refund all incorrect fees and charges.
Westpac has also accepted that it may have contravened both the Financial Markets Conduct Act (FMCA) and the Fair Trading Act (FTA).
The FMA says that Westpac has already “completed a significant part of the work” needed to reach out to affected customers and process refunds, and the bank has agreed to an Enforceable Undertaking which will require it to notify the FMA when it has completed the process.
Commenting on the case, FMA director of regulation Liam Mason 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.”
Commerce Commission chair Anna Rawlings said that the Commission encourages financial institutions to self-report when things go wrong, and to take steps to remediate issues of their own accord.
“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,” she stated.
Meanwhile, Westpac has issued an apology to its affected customers. Approximately $1.28 million will be refunded to customers who had fee waivers incorrectly applied between 2007 and 2017, and a further $5.7 million will be returned to those with incorrectly applied relationship rewards.
“We apologise to all the customers affected, most of whom we have already refunded,” acting general manager of consumer banking and wealth Gina Dellabarca said. “In most instances the individual amounts are small and are the result of errors in manual processes. We want to assure our customers that we have now changed our systems so that the issue does not occur again.”
