Westpac New Zealand, the local unit of Australian lender Westpac, has admitted to misleading representations that led to customer overcharges totalling NZ$6.35m ($3.59m).
This admission came as part of a civil proceeding initiated by New Zealand’s Financial Markets Authority (FMA) at the High Court in Auckland.
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The bank acknowledged breaches of the fair dealing provisions under the Financial Markets Conduct Act 2013, affecting 24,621 customers.
FMA enforcement head Margot Gatland said: “Westpac’s issues stemmed from deficiencies in its systems that meant the bank failed to deliver to them contractually agreed discounts. Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises.”
“The FMA acknowledges Westpac’s full cooperation throughout the FMA’s investigation, and the work it undertook to remedy the issues.”
Westpac’s misrepresentations involved customers entitled to discounts under employee, gold and platinum (EGP) packages, who did not receive the advertised benefits.
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By GlobalDataAdditionally, personal and business banking customers were overcharged under other packaged arrangements, and agreed pricing for “Business Transact Account” holders was not honoured.
The EGP packages were supposed to offer discounts across Westpac’s banking services.
However, due to the absence of a process for staff to verify eligibility for package benefits on subsequent products and services, up to 31% of eligible customers were overcharged.
The errors were evident in account statements and policy documents, misleading customers into believing they had received the benefits.
Similar issues resulted in the delivery of other Westpac packages to personal and business customers, leading to up to 43% of eligible consumer customers and 32% of eligible business customers being overcharged.
The bank’s account statements inaccurately implied that customers were charged correct rates.
For small business customers with a “Business Transact Account”, internal system errors and reliance on manual processes resulted in incorrect charge codes being applied.
Consequently, customers did not receive lower account maintenance fees or fee waivers on certain transactions.
FMA and Westpac have agreed to settle the proceedings on mutually acceptable terms.
Westpac expects the court in Auckland to hear the matter in 2025, reported Reuters.
