An Australian court ordered one of the country’s big banks, Westpac Banking Corp., to pay A$26 million for failing customers facing financial hardship.
The Federal Court of Australia found that, between 2015 and 2023, the bank failed to respond to more than 200 hardship requests from clients of Westpac and several subsidiaries that were struggling to make payments on mortgages, personal loans and credit cards within the time frames required by law.
“… while the contraventions were not suggested to be deliberate and arose instead from inadequate systems and operational failures, I have accepted that they were grossly negligent,” said Justice McEvoy in his decision.
Some of the affected customers had negative credit information added to their credit files, and their debts sold to collection agencies that pursued those debts, the judge noted.
“These circumstances add an additional layer of harm, and significance, to Westpac’s conduct,” McEvoy said.
The judge ordered a $26 million (all figures in Australian dollars) penalty against the bank, and required the bank to make operational changes to ensure that hardship requests are resolved on time, as required.
Westpac admitted to certain contraventions in the proceeding, and paid more than $1.7 million in remediation to affected customers — including fee refunds and compensation for non-financial losses, the Australian Securities and Investments Commission (ASIC) noted.
The ASIC sought a $30-million penalty against the bank, while the bank argued that $10 million would be more appropriate.
The bank cooperated with the ASIC’s investigation and the enforcement proceeding, and it agreed to fund and implement new systems and processes for receiving and responding to online hardship notices.
“As Australians contend with a higher cost of living, lenders must prioritize their customers, especially those who are struggling financially, and ensure they are given the protections they are entitled to under the law,” said ASIC deputy chair Sarah Court in a release.