Westpac has agreed to compensate over 19,000 new credit card customers who were not provided with the required disclosure information when getting their credit cards

Westpac has agreed to compensate over 19,000 new credit card customers who were not provided with the required disclosure information when getting their credit cards

Westpac in New Zealand has agreed to compensation totalling $3.7 million for over 19,000 new credit card customers who did not receive the required disclosure information when receiving their cards.

Westpac has signed a settlement agreement with the Commerce Commission admitting it breached the Credit Contracts and Consumer Finance Act 2003.

The bank has accepted that it breached the law by failing to provide key information to credit card customers before they entered into their contracts. Due to a process error, when Westpac posted credit cards to over 19,000 new personal credit card customers between May 2017 and March 2018, it failed to provide the required initial disclosure of their credit terms.

Westpac NZ General Manager of Consumer Banking and Wealth, Gina Dellabarca, said an error during an upgrade to Westpac’s IT systems resulted in a welcome letter containing the disclosure information not being sent to the affected customers. Westpac proactively identified the error and reported it to the Commerce Commission.

“We apologise to all the card holders affected and want to reassure our customers that our systems and processes have been upgraded,” Ms Dellabarca said.

Westpac NZ is contacting affected customers to inform them of the compensation payment, in line with procedures agreed with the Commerce Commission.

19,365 customers will be paid a total of $3.7 million, in accordance with the settlement agreed with the Commerce Commission. This will include "at least" $3.6 million to customers to whom it failed to provide the required initial disclosure information, while Westpac has already written off $100,000 owed by some affected customers. 

The Credit Contracts and Consumer Finance Act requires lenders to provide important information that helps consumers understand their rights and obligations under their loan before they enter into their loan contract. 

Westpac reported the issue to the Commission in March 2018. The Commission then filed High Court proceedings against the bank in July 2019, seeking a declaration that the bank breached the Act as well as orders for statutory damages and refunds of costs of borrowing. As part of the settlement, Westpac has agreed to admit in court that it breached its legal obligations. 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

5 Comments

Comment Filter

Highlight new comments in the last hr(s).

Another banking screw-up comes to light. Imagine what we don't know.

At $3.7m it's probably cheaper for Westpac to just keep breaking the law. What a win for Westpac! Whoever negotiated this settlement is a legend.

Spot on. Banker Gangstas

Does the fine go to the regulator or the customers?

Westpac refunded me $800 plus for overcharging.

Still waiting for a reply from then on what the $800 plus is made up of. I explained the IRD will want to know.