Bank cops record fine
Westpac New Zealand has been penalised $3.64 million by the high court for breaching lender responsibility principles.
The judgement comes after multiple failures meant customers didn’t receive legally required information about their loans and, in some cases, agreed interest-rate discounts.
Sarah Bartlett, the Commerce Commission’s director of credit, says by failing to invest in adequate systems and processes Westpac failed to provide required information to borrowers and guarantors so they could to make informed decisions.
Westpac also didn’t have adequate systems, processes and controls in place to ensure it honoured rate discounts it had agreed to with customers on their home loans.
“This is the largest pecuniary penalty imposed under the Credit Contracts and Consumer Finance Act CCCFA] so far,” says Bartlett.
“It sends a strong message not only to Westpac but to the consumer credit industry that continued failings to adequately invest in robust systems and compliance practices will not be tolerated. There are serious consequences for not complying with the act.”
In her judgement, Justice Anderson found Westpac’s failures related to systems that were “set up in a way that was foreseeably deficient”.
She said: “Multiple steps could have been taken to prevent the harm including changes to systems, adequate staff training, and mechanisms to identify and respond where disclosure was not provided and discounts were not applied.”
The court also made declarations Westpac breached the responsible lending principles in section 9c of the CCCFA, which is consistent with admissions made by the bank.
Bartlett says the result follows the commission’s “careful and thorough investigation” into the conduct, which was self-reported by Westpac. “As with any self-report, our ability to progress an investigation is contingent on receiving complete and timely information.”
Westpac agreed to admit to the breaches before the regulator filed proceedings. The penalty reflects it has remediated some 11,398 impacted borrowers a total of $2.67m. The conduct also impacted up to 3,012 guarantors. A copy of judgement is available on the case register.
