Westpac has been fined $40m for charging fees to more than 11,800 dead people, bringing the total the federal court has ordered the bank to pay in a string of misconduct cases brought by the corporate regulator to $130m.
The Australian Securities and Investments Commission launched the six cases against Westpac in November, accusing the bank of charging financial advice service fees to the dead, double-charging for insurance, collecting and paying illegal commissions, failing to properly disclose fees, allowing company accounts that should have been closed to stay open and selling personal debts to collectors at an interest rate higher than allowed.
Westpac admitted to the allegations, which affected 70,000 customers, and agreed to pay more than $80m in remediation.
The cases have been heard over the past month by a federal court justice, Jonathan Beach.
On Friday, he handed down judgment in the case of the fees from dead people – the last case to be heard – and ordered Westpac to pay Asic $40m.
Westpac “utterly failed to address the issues systematically”, the judge said.
He has previously ordered Westpac to pay $15m for double charging 7,000 customers for insurance; $6m for failing to disclose financial service fees to 25,000 customers; $20m for allowing 21,000 accounts belonging to deregistered companies and holding $120m to remain open and charging fees on them; $12m for selling the debt of 16,000 customers, including some who were financially vulnerable, to collectors at a higher rate than allowed; and $20m for charging commissions to more than 9,900 customers of subsidiary BT, even though such payments were banned in 2012.
“The breaches found by the court in these six cases demonstrate a profound failure by Westpac over many years and across many areas of its business to implement appropriate systems and processes to ensure its customers were treated fairly,” Asic’s deputy chair, Sarah Court, said.
“Westpac, like all licensees, has an obligation to be honest and fair in its provision of financial services. Despite this, Westpac failed to prioritise and fund the systems upgrades necessary to help fulfil this obligation.
“The sheer scale of this impact suggests that, at the time, Westpac had a culture that did not prioritise compliance.”
Court said many of Westpac’s breaches of the law – including charging fees to the dead – continued even after the financial services royal commission in 2018 “gave prominence to many of these issues across the banking industry and saw law reforms introduced to prevent harm”.
“Consumer harm caused by systems failures is unacceptable,” she said.
“Financial institutions must invest in systems that allow them to meet their obligations to customers. Asic expects the industry to do this work quickly and efficiently.”
