Westpac To Pay A$113 Mln Fine For Widespread Compliance Failures

(RTTNews) - Westpac (WBC.AX, WBK) has agreed to pay A$113 million in fines after Australian regulator found the banking giant had committed widespread compliance failures that included charging dead people.

The Australian Securities and Investments Commission or ASIC said it has commenced six civil penalty proceedings against Westpac in the Federal Court. The alleged conduct occurred over many years and affected many thousands of consumers.

The Westpac businesses against whom the allegations are made include its banking, superannuation and wealth management brands as well as Westpac's former general insurance business.

The ASIC stated that Westpac has admitted the allegations in each of the proceedings and will remediate about A$80 million to customers. ASIC and Westpac will submit to the Court that combined penalties of more than A$100 million are appropriate.

The ASIC alleged that over a 10-year period, Westpac and related entities within the Westpac group, charged over A$10 million in advice fees to over 11,000 deceased customers for financial advice services that were not provided due to their death.

The ASIC alleged that Westpac distributed duplicate insurance policies to over 7,000 customers for the same property at the same time, causing customers to pay for two (or more) insurance policies where they had no need for the additional policies. ASIC also alleged that Westpac issued insurance policies to, and sought payment of premiums from, 329 customers who had not consented to entering into an insurance policy.

ASIC alleged that Westpac subsidiary BT Funds Management charged members insurance premiums that included commission payments, despite commissions having been banned under the Future of Financial Advice reforms.

ASIC alleged that Westpac licensees BT Financial Advice, Securitor and Magnitude (all no longer operating) charged ongoing contribution fees for financial advice to customers without proper disclosure.

ASIC alleged that Westpac did not have appropriate processes to manage accounts held in the names of deregistered companies. As a result, Westpac allowed about 21,000 deregistered company accounts to remain open.

ASIC alleged that Westpac sold consumer credit card and flexi-loan debt to debt purchasers with incorrect interest rates. These interest rates were higher than Westpac was contractually allowed to charge on at least part of the debts, resulting in more than 16,000 customers, who were likely to be in financial distress, being overcharged interest.