A Federal Court has ordered Westpac to pay $26 million in civil penalties after finding the bank "grossly negligent" in its handling of financial hardship requests.
The penalty, handed down this week by Justice Timothy McEvoy, stems from Westpac's failure to respond to more than 200 online hardship notices within the 21-day timeframe required under the National Credit Code.
The conduct spanned nearly six years, from 2017 to 2023, and extended across Westpac's subsidiaries St George Bank, Bank SA, and Bank of Melbourne. Affected customers had flagged difficulty meeting repayments on home loans, personal loans, car loans, and credit cards.
Justice McEvoy said, “while the contraventions were not suggested to be deliberate and arose instead from inadequate systems and operational failures, I have accepted that they were grossly negligent.”
The borrowers who lodged the overlooked hardship notices were among the most financially exposed in Westpac's book — people dealing with domestic abuse, serious illness, natural disasters, and job loss. Rather than receiving relief, some had debts on-sold to third-party purchasers who pursued them, and adverse credit information recorded on their files.
Critically, the court found that Westpac's conduct continued even after it had received complaints from customers about missing online hardship notices that should have triggered an investigation, AFR reported.
Senior management was reportedly unaware of the systems failure until February 2022, according to news.com.au.
“Instead of providing a safety net for these customers, Westpac's systemic failures let them slip through the cracks,” ASIC Deputy Chair Sarah Court said in a media release.
The case is not an isolated one. ASIC's action against Westpac follows similar proceedings against NAB, penalised $15.5 million in August, and ANZ, ordered to pay $40 million, for comparable breaches — signalling that hardship compliance has become a priority enforcement area for the regulator, not a box-ticking exercise.
ASIC had sought a $30 million fine; Westpac argued $10 million was appropriate. The court landed at $26 million, with Westpac also ordered to pay the regulator's costs on top of the $1.7 million already paid in customer remediation.
“As Australians contend with a higher cost of living, lenders must prioritise their customers, especially those who are struggling financially, and ensure they are given the protections they are entitled to under the law,” Court said.
Westpac said it has since upgraded its online hardship systems and strengthened internal processes to meet the standards its customers deserve.
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