Westpac fined $3.25m for misleading customers

The Financial Markets Authority has fined Westpac $3.25 million for misleading representations.

• Westpac has been fined $3.25 million for misleading representations.
• In total, 24,621 customers were affected leading to $6.35m in overcharges.
• Westpac admitted its conduct in December.

Westpac has been fined $3.25 million for misleading customers over advertised discounts resulting in more than 24,000 people being overcharged.

In total, 24,621 customers were affected by Westpac’s breaches of fair dealing provisions leading to $6.35m in overcharges.

Westpac admitted its conduct in the High Court in December after civil proceedings were brought by the Financial Markets Authority (FMA).

A Westpac spokesperson said the bank had fully co-operated with the FMA’s investigation.

“Westpac NZ self-reported to the FMA a historic issue where we did not deliver benefits fully to some customers under two types of product packages (Employee, Gold and Platinum Packages and Association Packages), and where we applied some incorrect pricing for some customers who had Business Transact Accounts.

“All customers impacted by these issues have been remediated and we no longer offer these packages.”

Margot Gatland, FMA head of enforcement, said the penalty reflected the number of customers affected.

“Westpac’s issues stemmed from deficiencies in its systems that meant the bank failed to deliver contractually agreed discounts to customers.

“Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises.”

Gatland said a relationship between financial institutions and their customers must be one of trust.

“Customers should rightfully expect to be treated fairly and that agreements between the two parties will be honoured,” she said.

Gatland acknowledged Westpac’s full co-operation and the work it did to remedy the issues.

In his ruling, Justice Geoffrey Venning said he accepted Westpac’s submission that there was no suggestion that its conduct was deliberate or wilfully misleading, nor that there was any intention to intentionally deprive customers of benefits.

“While it had in place systems, the systems were insufficient,” Venning said.

Cameron Smith is an Auckland-based journalist with the Herald business team. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace and macroeconomics.