The action against the Big 4 bank is part of a broader clampdown on industry practices
The Federal Court has slapped Westpac Banking Corporation with a $1.5m pecuniary penalty after it issued unsolicited consumer credit insurance (CCI) policies to 141 customers.
ASIC Deputy Chair Sarah Court described the action against the Big 4 bank as part of a broader clampdown on industry practices.
“The industry is now clearly on notice as to the consumer harm associated with the mis-selling of these products, and under the new penalty regime ASIC will be seeking significantly increased penalties for misconduct of this kind,” she said.
Between April 2015 and February 2017, Westpac had mis-sold CCI policies to customers who did not request the product, and then sent a letter to each customer asserting the right to payment of a monthly premium. The Federal Court heard evidence that between December 2014 and December 2017, Westpac received approximately 3,730 complaints from affected customers, resulting in refunded premiums totalling approximately $1.7m.
The bank’s conduct amounted to 141 contraventions of section 12DM of the ASIC Act, which carries a maximum penalty of more than $240m.
In a judgment handed down on 7 April, Federal Court Justice Anna Katzmann noted that while there was no suggestion that senior management participated in or authorised the contraventions, certain members were aware that most CCI complaints were consent related during the relevant period. Nonetheless, Katzmann ruled that the bank’s conduct did not warrant a penalty “anywhere near the upper end of the scale.”
She determined the contraventions were not deliberate and that although Westpac demonstrated a lack of care, the conduct did not amount to negligence. Other mitigating factors included the limited loss to customers and the bank’s early admission of liability, as well as its cooperation with ASIC throughout the investigation.
In a statement to 9News, Westpac confirmed that it had remediated the customers impacted by the incident, and that it had not sold CCI products since 2019.