Around 200,000 customers at Westpac and its subsidiaries will be refunded a combined $65 million after the bank found out they didn’t get benefits they were entitled to when they opened new accounts.
Corporate regulator ASIC has been notified.
Westpac and the other three major banks have been hit by a series of scandals, including alleged manipulation of the bank bill swap rate, wrongly charging credit card fees, unjustly declining insurance claims and giving poor financial planning advice.
At Westpac, the latest refunds, with interest, are expected to total $65 million, with an after tax cost to the bank of $45 million to be included in the full year financial results.
The issue is for customers holding Premier Advantage Packages with Westpac or Advantage Packages with St George, BankSA, or Bank of Melbourne from 2010.
Under the terms of the packages, customers were entitled to a range of benefits, including automatically receiving discounts on core products such as home loans, credit cards, or transaction accounts.
However, some didn’t get discounts on ancillary products such as home and contents insurance and term deposits. The packages have since been simplified with benefits automated.
“At Westpac, our business depends on building long term relationships with our customers,” says Westpac chief executive, consumer bank, George Frazis. “So when we get something wrong, we want our customers to have confidence that we will put it right.
“Westpac apologises unreservedly for a process that did not suit customers. By automating the discounts, we have ensured that our customers will not be affected in this way again.”