Westpac has apologised to customers for a technology glitch that delayed the processing of some pre-Christmas transactions.
At least 75 people have complained to the Banking Ombudsman about a technology glitch at Westpac Bank that sent scores of customers into overdraft, while the financial conduct regulator says it is also engaging with the bank.
Westpac apologised to customers over the weekend after transactions made on the busiest shopping days before Christmas were not processed correctly and only put through a fortnight later.
A technology glitch is being blamed for MasterCard credit and debit payments made on December 22 and 23 not going through properly.
The issue has left some Westpac customers out of pocket and with transactions being declined after they were accidentally sent into overdraft.
A spokesman for the Financial Markets Authority said it did not comment on whether it had received complaints about specific entities.
“We are engaging with Westpac regarding this issue.”
But its powers to take a deep dive into the bank’s conduct are currently limited as new legislation set to regulate how banks treat customers isn’t expected to come into force until early 2025.
The Conduct of Financial Institutions Bill was passed into law last year. It was put forward after joint reviews by the FMA and the Reserve Bank found “significant weaknesses” in the way New Zealand banks and insurers govern and manage conduct risks and gaps in the regulation of them.
The local reviews followed Australia’s Royal Commission into the financial sector.
The new law will give the FMA additional powers to monitor how banks communicate with their customers and how they adhere to the fair conduct principle.
Banking Ombudsman Nicola Sladden said it had received a “significant number of complaints” about the issue, with at least 75 by lunchtime on Monday.
It typically received around 5000 cases in a year. “To get so many in a few days about a particular bank on a particular issue indicates the wide level of concern and the significance of this issue for many New Zealanders.”
Sladden said it was encouraging Westpac customers to contact the bank to try sorting out the matter directly first, and if they were not happy with the response to come back to the ombudsman scheme and then it could take further steps.
“At this stage we are providing guidance about their rights and what to expect in these circumstances.”
She said card payments were usually processed within a day or two of the transactions, whereas in this case the payment processing was delayed significantly.
“Such delays may result in a customer accidentally overspending, and can result in an unarranged overdraft or exceeding the credit limit if there are insufficient funds in the account when the payment is finalised. Bank terms and conditions generally allow the bank to honour a payment even where there are insufficient funds.”
She said that where an account had gone into unarranged overdraft or exceeding the credit limit due to a bank error, the bank would typically reimburse any associated fees and interest.
“In many cases, a refund of the fees and interest will likely be a suitable remedy to such an error. However, we appreciate that some customers may have been impacted more significantly, such as those who were unable to make planned purchases and experienced distress, embarrassment, disruption to financial planning and/or financial difficulties. In such cases, customers may be entitled to compensation for stress and inconvenience.”
Sladden said she understood the bank had already agreed to automatically waive any additional costs related to the issue and was looking into compensating people for the financial disruption and inconvenience on a case-by-case basis.
“We think that is entirely appropriate.”
Bank critic and KiwiSaver scheme founder Sam Stubbs hit out at Westpac on social media platform LinkedIn over the issue.
“No one should expect perfection of anyone. But when a bank makes as much money as Westpac, they should invest in getting the basics right. And this appears to be really basic stuff. Is this a consequence of too little investment because their Australian parent demands even higher profits?
“If Westpac were asked this, their answer would be predictable. But what actually happened here suggests it’s a fair question. And it’s one the Reserve Bank should be asking too. Westpac customers deserve better.”
In response to the criticism, a Westpac spokesman said: “We recognise that this payments processing issue has caused confusion and inconvenience to customers and we sincerely apologise.
“Any fees and interest related to this issue are being waived and we invite customers who have been left financially challenged to visit us in branch or call our contact centre so we can assess how we can help.
“We’ll be doing a thorough review to understand what went wrong so we can make any necessary changes.”
Westpac New Zealand made a net profit after tax of $1.047 billion in the year to September 30.
A spokesman for the Reserve Bank declined to comment on the issue. “We do not comment on the operational matters of individual entities regulated by the Reserve Bank of New Zealand - Te Pūtea Matua.”