ASIC is suing Westpac over alleged policy breaches, including charging fees to the dead – and it’s seeking $113m in penalties

ASIC is suing Westpac over alleged policy breaches, including charging fees to the dead – and it’s seeking $113m in penalties
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  • Australia’s corporate watchdog is suing Westpac over six major alleged policy breaches.
  • The Big Four bank and its entities allegedly charged fees to deceased estates, among other claims.
  • For those breaches, which Westpac has admitted, ASIC is seeking civil penalties of $113 million.
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Australia’s corporate watchdog has launched “unprecedented” legal action against Westpac over a string of alleged policy breaches, including claims the financial services titan and its entities charged $10 million in fees to deceased clients, mishandled the credit card debt of users likely to be facing financial stress, and slugged thousands of customers for insurance policies they never needed.

In a major Tuesday morning announcement, the Australian Securities & Investments Commission (ASIC) said it is seeking $113 million in damages from Westpac, alleging six separate contraventions of corporate law.

The claims, which Westpac has admitted to, include the allegation the bank and firms under its umbrella charged more than $10 million in advice fees to 11,000 deceased estates, including in circumstances when company representatives knew the payee was already dead.

In a particularly egregious claim, ASIC alleges Westpac wrongly quoted the interest rates of credit card debt it sold on to third-party debt buyers, “resulting in more than 16,000 customers, who were likely to be in financial distress, being overcharged interest.” Westpac has already repaid some $17 million to customers impacted by that process.

The bank and its entities allegedly failed to reveal a swathe of fees to their clients, resulting in at least 25,000 customers facing $7 million in fees which had not been adequately disclosed.

ASIC alleges Westpac distributed duplicate insurance policies to thousands of clients, effectively charging them for coverage they did not need. In more than 300 cases, the Westpac allegedly sought premiums from clients who never agreed to take out insurance in the first place.

Further, the corporate regulator alleges that Westpac subsidiary BT Funds Management folded commission fees into its own insurance premiums, despite that not being permitted.

Westpac also allegedly mishandled the company accounts of 21,000 firms which had been deregistered, siphoning fees from accounts which should have been surrendered to ASIC or the government.

ASIC alleges that in each instance, barring the matters of alleged debt onsale and the BT Funds Management breaches, Westpac “failed to ensure that its financial services were provided efficiently, honestly and fairly.”

ASIC said the bank has admitted to those failures, and has already agreed to repay affected customers to the tune of $80 million.

The regulator is now launching Federal Court action seeking civil penalties totalling $113 million, a move the bank said it has agreed to.

The decision to sue over six sizeable allegations simultaneously is “unprecedented” for ASIC, said the watchdog’s deputy chair Sarah Court.

“However, these were exceptional circumstances.”

ASIC is “disappointed to have to yet again commence legal proceedings” against a Big Four bank, Court added, just days after the regulator sued competitor ANZ for allegedly misusing a home loan ‘introducer’ program.

In the bank’s own statement, Westpac CEO Peter King said the legal action, and the chance of major financial penalties, was necessary to distance the bank from its alleged mismanagement.

“This outcome is an important step forward for us as we continue to fix issues and build stronger risk foundations,” King said.

“In each of these matters, Westpac has fallen short of our standards and the standards our customers expect of us.

“The issues raised in these matters should not have occurred, and our processes, systems and monitoring should have been better. We are putting things right and unreservedly apologise to our customers,” King said.