Westpac Bank has admitted overcharging nearly 25,000 customers more than $6.3 million by not giving promised discounts and benefits. Photo: RNZ / Marika Khabazi
- Westpac admits to overcharging nearly 25,000 customers $6.3m
- Bank failed to apply promised discounts and preferential rates
- Finance regulator says Westpac systems deficient
- Westpac self reported breaches, paid back affected customers
Westpac Bank has admitted overcharging nearly 25,000 customers more than $6.3 million by not giving promised discounts and benefits.
The Financial Markets Authority (FMA) brought civil proceedings against the bank for not delivering advertised benefits for various banking packages, which resulted in consumer and business customers effectively being overcharged.
FMA Head of Enforcement Margot Gatland said Westpac used preferential pricing to attract and retain customers, but its systems were not up to the job.
"Westpac's issues stemmed from deficiencies in its systems that meant the bank failed to deliver to them contractually agreed discounts."
The breaches involved several specialised packagers of services and products, which were supposed to give retail and business customers discounts and preferential rates, which would be extended to any new services committed to.
However, the record keeping was done manually, staff had not been given guidance nor had any way of checking eligibility for further benefits.
"In the event, Westpac frequently overlooked the point; in turn up to 31 percent of eligible customers were overcharged ... In each case misleading pricing information was displayed to customers, implying that the benefits had been applied in circumstances that they had not," the FMA said.
Similar issues affected another set of packages, resulting in overcharging of 43 percent of personal customers and 32 percent of business customers eligible.
Manual processing was also largely responsible for mistakes occuring in business accounts which should have received lower fees.
In a statement, Westpac said it discovered the errors and reported them to the MA.
"The matter relates to historical issues where we did not deliver benefits fully to some customers under two types of product packages ... and some incorrect pricing for some customers."
"All customers impacted by the packages issue have been remediated and we have cooperated fully and openly with the FMA on their investigation."
Westpac is the latest big financial institution to have fallen foul of the FMA crackdown, which has resulted in the ANZ, Kiwibank, and several finance and insurance companies being penalised millions of dollars. https://www.rnz.co.nz/news/business/530099/better-outcomes-for-customers-fma-targets-insurers-and-banks
The High Court will decide on a penalty for Westpac's breaches next year.
