Westpac NZ is refunding about 93,000 customers who were overcharged to the tune of $7 million after self-reporting the issue to the Financial Markets Authority (FMA) and the Commerce Commission.
The FMA says Westpac did not correctly discount fees on a number of different banking packages. The affected banking packages included Westpac's Tertiary Pac, Career Starter Pac, Graduate Pac, International Student Pac, Relationship Rewards Scheme, Family Benefits and Westpac Staff Package, Bizpac, and Government Packages and Portfolio Package. Westpac has agreed to refund all fees and charges incorrectly charged and will take "all reasonable steps" to reach impacted customers, the FMA says.
Westpac itself says it's refunding $1.28 million to around 60,000 customers due to fee waivers being incorrectly applied to their tertiary or graduate banking accounts between 2007 and 2017. This is on top of refunds totalling $5.7 million to about 30,000 customers, that were disclosed in February, relating to incorrectly applied relationship rewards. The two sets of refunds form part of a set of enforceable undertakings with the FMA and Commerce Commission to fix a range of banking packages where errors were identified.
“We apologise to all the customers affected, most of whom we have already refunded. In most instances the individual amounts are small and are the result of errors in manual processes. We want to assure our customers that we have now changed our systems so that the issue does not occur again," says Gina Dellabarca, Westpac's acting general manager of consumer banking and wealth.
The FMA says it was told about the problems due to potential breaches of the fair dealing provisions of the Financial Markets Conduct Act (FMCA). The Commerce Commission was told because of possible breaches relating to consumer credit contracts under the Fair Trading Act (FTA).
"Westpac accepted that it may have contravened one or both of the Acts," the FMA says.
"It is understood that Westpac has already completed a significant part of the work to reach and refund impacted customers. The process for remediation is contained in an enforceable undertaking that Westpac has agreed to give the FMA and the Commerce Commission. The undertaking confirms that Westpac will notify the FMA when it has completed this process."
The two enforceable undertakings signed include one between the FMA, the Commerce Commission and Westpac under the FMCA and FTA, and the other between the FMA and Westpac under the FMCA.
FMA director of regulation Liam Mason says the enforceable undertakings show regulatory requirements working, saying Westpac's proactive behaviour is the type of behaviour expected from market participants. New Commerce Commission chairwoman Anna Rawlings says the consumer watchdog also encourages the identification and self-reporting of conduct like this and appropriate remediation for affected customers.
"We emphasise the importance of robust systems and sound monitoring practices to help avoid errors, and to quickly identify and fix them if they occur," says Rawlings.
Below is background provided by the FMA
In December 2017, Westpac self-disclosed to the FMA and the Commerce Commission that there was an issue around the discounting of fees for some customers. Westpac did not apply discounts appropriately, impacting 61,000 customers to a value of approximately $1.28 million.
Westpac said it planned to refund all fees incorrectly charged. The bank said it would also improve its systems and start a wider review to ensure customers were receiving appropriate discounts.
In December 2018, Westpac notified the FMA and Commerce Commission that it had identified similar issues with another 32,000 customers, with around $5.7 million inappropriately charged.
The affected banking packages included the Tertiary Pac, Career Starter Pac, Graduate Pac, International Student Pac, Relationship Rewards Scheme, Family Benefits and Westpac Staff Package, Bizpac, and Government Packages and Portfolio Package.
Enforceable Undertaking – Westpac, ComCom and FMA published here
Enforceable Undertaking – Westpac and FMA published here