Financial Markets Authority says bank’s conduct impacted 24,621 customers
The Financial Markets Authority (FMA) has announced that Westpac New Zealand Limited will pay a $3.25m penalty due to breaches of the fair dealing provisions of the Financial Markets Conduct Act 2013 (FMCA), which resulted in $6.35m in overcharges.
“The $3.25 million penalty against Westpac reflects the number of customers affected,” said Margot Gatland, FMA head of enforcement, in a media release.
The FMCA claimed that the bank’s breaches impacted 24,621 customers in total.
“Westpac’s issues stemmed from deficiencies in its systems that meant the bank failed to deliver contractually agreed discounts to their customers.” Gatland said. “Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises.”
Westpac identified its issues, reported them promptly to the FMA, and participated in extensive remediation.
“The FMA acknowledges Westpac’s full cooperation throughout the FMA’s investigation, and the work it undertook to remedy the issues,” Gatland said.
The FMA commenced civil proceedings against Westpac before the Auckland High Court last December. The bank admitted to the court that it made false and/or misleading representations and breached ss. 22 (a), (f), and/or 22(h) of the FMCA.
Westpac and the FMA agreed on the amount of the pecuniary penalty for its FMCA breaches. The High Court accepted this amount.
As the parties jointly suggested, the court found that Westpac contravened s. 22(h) and/or s. 22(a) and (f) by:
failing to provide package benefits to customers relating to its employee gold and platinum packages and association packages
representing that it had the right to charge amounts that it was not entitled to charge in connection with these packages
As the parties agreed, the court also found the bank breached s. 22(f) and/or s. 22(h) by failing to offer the agreed pricing to customers with business transact accounts and representing that it had the right to charge incorrect amounts relating to these accounts and that those customers had received the agreed pricing.
Under the court’s order, the penalty should apply first to the FMA’s costs in initiating the civil proceedings.
The court accepted that Westpac did not engage in deliberate or wilfully misleading conduct and did not intentionally deprive customers of benefits. However, the court noted that the systems that the bank implemented were not enough.
“The relationship between financial institutions and their customers must be one of trust,” Gatland said in the FMA’s media release. “Customers should rightfully expect to be treated fairly and that agreements between the two parties will be honoured.”
