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.