Westpac, one of Australia’s ‘big four’ banks, is being sued by the corporate watchdog for failing to respond to over 200 customers’ financial hardship applications.
The Australian Securities and Investments Commission (ASIC) legally requires that banks respond to financial hardship notices from customers within 21 days.
Westpac says a technical error caused the missed notices, which it self-reported to ASIC.
Hardship notices
If a customer is unable to make a repayment on a loan due to financial stress, they can lodge a hardship notice with their bank.
This can result in the bank negotiating new terms to accommodate the customer’s financial difficulties.
While a bank doesn’t have to make a decision in the mandatory three-week timeframe, it must let the customer know if it needs more information or if it has decided to deny the application.
Why is ASIC suing Westpac?
ASIC claims Westpac failed to do this for notices from 229 customers between 2015-2022. They also say that Westpac didn’t do enough to address issues in the response process.
Westpac’s response
Westpac admitted it wasn’t “good enough” that customer notices were missed in the first place.
It said the 229 applications made up a tiny portion of all notices received across the seven-year period. It also said the issue had been resolved, and new processes are now in place.
Impacted customers have since been given financial relief, including some refunds and debt waivers. Westpac says this has totalled almost $1 million.
Why is ASIC suing Westpac?
The case will be heard in the Federal Court.
ASIC wants Westpac to be fined, and for Westpac to publicise its legal breaches.
