The High Court of New Zealand has imposed a NZ$3.25 million penalty on Westpac after an earlier ruling that it had failed to deliver contractually agreed discounts to more than 24,000 customers, many as a result of systems errors.
The case, brought by New Zealand’s financial services regulator the Financial Markets Authority (FMA) and acknowledged by Westpac in Court, argued that the bank misled customers regarding advertised discounts, with a number of business customers being overcharged.
With its failure to provide the entitled discounts, Westpac had overcharged customers $6.35 million over the decade the infractions occurred (between January 2011 and July 2022), the Court heard.
Westpac admitted its failure to:
- provide entitled customers with advertised discounts under Westpac’s Employee, Gold and Platinum (EGP) packages. The Court heard that nearly one third (31%) of eligible EGP customers were overcharged;
- provide personal and business banking customers promised benefits under one of Westpac’s other advertised packaged arrangements;
- to honour agreed pricing for business customers who held a ‘Business Transact Account’.
The FMA’s head of enforcement Margot Gatland noted that Westpac’s failure to deliver these contractually agreed discounts to customers stemmed from deficiencies in its systems and back-end processes.
“Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises,” Gatland said.
The Court heard Westpac’s internal systems for recording customers’ entitlements were in many cases reliant on manual entry by staff, and often lacked the ability for staff to confirm customers’ eligibility.
In the case of the Association packages, offered to various personal and business banking customers, Westpac required staff to manually record a customer’s entitlement on a customer’s personal file.
The Court heard that Westpac “had no guidance or processes in place for staff to check customers’ eligibility for when setting up products and services acquired after customers first entered into the Association package agreement and had no systems, processes or controls to periodically check”.
Westpac, the FMA confirmed, has since provided remediation to impacted customers, totalling NZ$7.35 million.
The FMA also acknowledged Westpac’s full cooperation throughout its investigation as well as its work undertaken to remedy the issues.
