Australian corporate watchdog imposed $113 million fine on Westpac bank for charging dead people and poor compliance culture.
Westpac has admitted that they broke the law and agreed to pay $113 million fine after the corporate regulator found out the bank had six lawsuits over charging fees to dead people and poor compliance culture that requires urgent improvements.
The bank has admitted law-breaking allegations by the Australian Securities and Investment Commission (ASIC). As per ASIC orders, in addition to the imposed penalties, the bank has to pay customers $80 million in remediation.
“The conduct and breaches alleged in these proceedings caused widespread consumer harm and ranged across Westpac’s everyday banking, financial advice, superannuation, and insurance businesses,” ASIC Deputy Chair Sarah Court said.
ASIC, an Australian corporate regulatory body, stated one of the six investigations found that Westpac had charged more than $7 million penalties over a 10 year period to 11,000 “deceased customers for financial advice services that were not provided due to their death.”
The corporate watchdog also said the bank distributed duplicated insurance policies to over 7,000 customers, obligating customers to unnecessarily pay for it.
ASIC’s authority, Sarah Court, said it was “unprecedented for Asic to file multiple proceedings against the same respondent at the same time” and the regulator was “disappointed” that it continued to have to take big banks to court. The conduct and breaches alleged in these proceedings caused widespread consumer harm and ranged across Westpac’s everyday banking, financial advice, superannuation, and insurance businesses.”
Sarah Court also stated, “A common aspect across these matters has been poor systems, poor processes, and poor governance, which is suggestive of an overall poor compliance culture within Westpac at the relevant time. Westpac must urgently improve its systems and culture to ensure these systemic failures do not continue.”
Westpac’s chief executive, Peter King, said the bank had “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 apologize to our customers.”
However, the $113 million fine has been accepted by Westpac but is subject to court approval. ASIC’s listed allegations include that
- Westpac charged 11,000 dead people
- Made 7,000 people pay for insurances forcefully
- Acquired $12 million from 8,000 people as illegal commission
- Failed to brief $7 million in fees they charged to 25,000 customers
- Kept 21,000 non-existed companies’ accounts
Despite the hefty fine, Westpac has escaped more adverse regulatory sanctions. However, the bank admitted the allegations and accepted to pay the penalties as per ASIC’s orders.
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