This is a press release from the FMA.
Westpac New Zealand Limited has admitted to misleading customers entitled to advertised discounts as well as overcharging some of its business customers.
Westpac made the admissions in civil proceedings brought by the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko – at the High Court in Auckland. Westpac’s breaches of the fair dealing provisions under the Financial Markets Conduct Act 2013 (FMCA) affected a total of 24,621 customers and resulted in $6.35m in overcharges.
Westpac admitted having made misrepresentations in respect of the following historic issues:
- Customers entitled to various benefits under Westpac’s Employee, Gold and Platinum (EGP) packages failed to receive the advertised discounts
- Personal and business banking customers failed to receive benefits under one of Westpac’s other advertised packaged arrangements
- Westpac failed to honour agreed pricing for business customers who held a “Business Transact Account”.
EGP packages issue
Each of the packages offered a range of discounts and preferential rates across Westpac’s banking services. When a customer entered into a package agreement, Westpac staff had to manually record a note in the customer’s file to confirm their eligibility for the package benefits.
When eligible customers subsequently acquired other products or services from the bank, Westpac had no process for staff to check whether the customer was eligible for package benefits on the subsequent products and services. There was no guidance for employees.
In the event, Westpac frequently overlooked the point; in turn up to 31% of eligible customers were overcharged. The overcharges were recorded in customers’ account statements (for account and card benefits) and/or their policy schedules and annual renewal letters (for insurance benefits).
In each case misleading pricing information was displayed to customers, implying that the benefits had been applied in circumstances that they had not.
Other packages
This concerned packages Westpac offered to its personal and business customers who entered into a package agreement. Westpac’s delivery of the packages was marred by the same issues as those that affected its delivery of the EGP Packages.
The result was that customers were overcharged and misled. As with the EGP Packages issue, this was recorded by Westpac in misleading account statements. The issue affected up to 43% of eligible consumer customers and up to 32% of eligible business customers.
BTA issue
Westpac offered agreed pricing to small business customers who held a “Business Transact Account” (BTA) with it. Westpac applied incorrect charge codes (used for pricing on the BTA accounts for many customers).
This occurred because of internal systems errors, which relied principally on manual processes. In the result, customers were overcharged because they did not receive the lower account maintenance fees that they were due and/or because fee waivers were not applied on certain transactions when they should have been.
In each case, customers received an itemised statement recording the amounts Westpac had charged them during the statement periods. These statements represented that the customers were being charged the correct rates – when they were in fact being charged at higher rates.
Westpac has provided remediation to impacted customers.
The following is the Westpac response.
The Financial Markets Authority (FMA) has today announced that it has filed proceedings against Westpac NZ, with a hearing likely some time in 2025.
The matter relates to historical issues where we did not deliver benefits fully to some customers under two types of product packages (Employee, Gold and Platinum Packages and Association Packages), and some incorrect pricing for some customers who had Business Transact Accounts.
Westpac self-reported these issues to the FMA and has been providing updates to them in relation to customer remediation as well as co-operating with their investigation.
All customers impacted by the packages issue have been remediated and we have cooperated fully and openly with the FMA on their investigation.
3 Comments
LOL. Discounts over multiple products from the same supplier again? Quelle surprise. Most older systems simply don't have a sufficiently 365 degree view of the customer to do this, and/or where it has been 'added on' with a CRM system the integration has never gone far enough to make this work. A 'note on the account' is never going to cut it. The referee may be penalizing a few, but the cry, "They're all doing it!", is likely to be true.
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