© Reuters. A woman exits the ground floor of an office building with Westpac logo amidst the easing of the coronavirus disease (COVID-19) restrictions in the Central Business District of Sydney, Australia, June 3, 2020. REUTERS/Loren Elliott
By Roushni Nair
(Reuters) -Australia’s corporate regulator said on Tuesday it was taking Westpac Banking (NYSE:) Corp to court over its alleged failure to respond to customers’ financial hardship notices between 2015 and 2022 within the required administrative time frame.
Under Section 72 of Australia’s National Credit Code, an individual with overdue payments can request a change to the terms of their credit contract on the grounds of financial hardship, and creditors are expected to provide a response in writing within 21 days of being informed.
Shares of Westpac dropped as much as nearly 1% to A$21.630 by 0105 GMT, versus a 0.6% fall in the broader benchmark index.
The Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings in the Federal Court against Westpac stating that shortcomings with the lender’s online hardship notice process resulted in 229 Westpac customers not receiving a response on time, ASIC said.
The proceedings against Westpac come at a time when regulators have resorted to increased scrutiny against Australian lenders taking into account all the recent notices issued to banks pertaining to data on fees charged to indigenous customers, banks not following required home loan guidance, push for a better approach to handling bank scams etc.
“I totally think increased scrutiny is warranted and politically it is an easy win for governments and regulators to look at the perceived ‘fat cats’,” said Damian Rooney, director of equity sales, Argonaut.
The legal proceedings are linked with a “technology failure” and Westpac has completed a remediation programme for the affected customers including payments for non-financial loss of about A$900,000 ($581,310.00), the company said.
Westpac could have done more to probe and rectify the system’s problems affecting its online hardship notification process, the regulator said.
“This error meant we didn’t provide some of our customers with the help they needed. For this, we are deeply sorry,” said Westpac Group Chief Information Officer Scott Collary.
($1 = 1.5482 Australian dollars)