ASIC has commenced six civil penalty proceedings against Westpac in the Federal Court, alleging widespread compliance failures across multiple Westpac businesses over many years, affecting thousands of consumers.
The allegations include Westpac’s wealth management brands, with the corporate regulator revealing that over a 10-year period the big four charged over $10 million in advice fees to over 11,000 deceased customers for financial advice services that weren’t provided due to their death.
Westpac has admitted the allegations in each of the proceedings and has agreed to remediate approximately $80 million to customers.
Commenting on the corporate regulator’s unprecedented number of charges against one entity, ASIC deputy chair Sarah Court said ASIC had numerous Westpac-related matters under investigation through the course of 2021, and decided to expedite those matters for consideration by the court at the earliest opportunity.
“ASIC is disappointed to have to yet again commence legal proceedings, on this occasion no fewer than six times, against a major bank,” said Ms 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.”
Following separate investigations into each matter, ASIC uncovered “poor systems, poor processes and poor governance” at the bank, which, it said, are suggestive of an overall poor compliance culture within Westpac.
“Customers are entitled to have trust and confidence in Westpac being able to deliver what it promises, without suffering financial harm. Westpac must urgently improve its systems and culture to ensure these systemic failures do not continue,” said Ms Court.
ASIC and Westpac are set to submit to the court that combined penalties of more than $100 million are appropriate.
Each matter will now be separately considered and determined by the court.
6 matters detailed
Under the first matter, it is believed Westpac over a 10-year period charged over $10 million in advice fees to over 11,000 customers for financial advice services that were not provided due to their death.
Moreover, according to the corporate regulator, Westpac distributed duplicate insurance policies to over 7,000 customers for the same property at the same time, as well as issuing insurance policies to 329 customers who had not consented to entering a policy.
ASIC also found that Westpac subsidiary BT Funds Management charged members insurance premiums that included commission payments, despite commissions having been banned under the Future of Financial Advice reforms. Some members also paid commissions to financial advisers via their premiums even though they had elected to have the financial adviser component removed from their account. BT Funds is remediating over $12 million to over 8,000 affected members who were incorrectly charged.
Matter four alleges that Westpac licensees BT Financial Advice, Securitor and Magnitude charged ongoing contribution fees for financial advice to at least 25,000 customers without proper disclosure. It is estimated that over $7 million in fees that had not been disclosed, or adequately disclosed, were charged.
The big four also allegedly allowed some 21,000 deregistered company accounts to remain open, continuing to charge fees on these accounts and allowing funds to be withdrawn.
And finally, ASIC alleges that Westpac sold consumer credit card and flexi-loan debt to debt purchasers with higher than allowed interest rates, resulting in more than 16,000 customers, who were likely to be in financial distress, being overcharged interest. Westpac and/or the debt purchasers have refunded over $17 million to affected customers.
The full list of Westpac businesses against which the allegations are made are:
- Westpac Banking Corporation
- Advance Asset Management Limited
- Asgard Capital Management Limited
- BT Funds Management Limited
- BT Funds Management No. 2 Limited
- BT Portfolio Services Limited
- Securitor Financial Group Pty Limited
- Magnitude Group Pty Ltd
And we’re to assume of course that they will lose their license and face criminal penalties also – just as any of us would if we had been found guilty of even a fraction of what they’ve done.
Pretty sure increased education will solve this problem.
In breaking news, ASIC bans the responsible managers for the 8 entities named. Yeah, that’ll be the day.
Front line staff: Hello CEO, when you joined you said , culture issues shouldn’t be ignored, swept under the carpet or downplayed
CEO: Did I say that? Oh yes, I truly believe culture is critical but that is not my Job and so will spend the least amount of time.
Front line staff: You said we can approach you directly and speak up; we have a major problem in the operations; actually outdated systems, processes and dysfunctional governance
CEO: would you please go to head of P&C
And just how many Westpac Executives, managers, AFSL RM, CEO & Board members will be personally charged, fined, banned or jailed ?
Oh that’s right ASIC those killer outcomes are only for Adviser scum.
The big bank execs will get a golden parachute at worst and a big thanks, proceed as you were.
And the share holders get to pay the fines, whilst Advisers pay the legal costs, what a crap system.
And what will happen to the Westpac Executives responsible for these failings……keep their bonuses and jobs and move on to their next debacle?? Disgraceful.
oops, I did it again. yeah yeah yeah yeah yeah yeah!