© 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
(Reuters) -Australia’s corporate regulator on Tuesday said 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.
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 in a statement.
The legal proceedings are linked with a “technology failure” and Westpac has contacted the affected customers and completed a remediation program including refunds of fees and interest, debt waivers and payments for non-financial loss of about A$900,000 ($581,310.00), the company said in an emailed response to Reuters.
The regulator said Westpac could have done more to probe and rectify the system’s problems affecting its online hardship notification process.
“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.
Many customers had disclosed their vulnerable circumstances to Westpac, including their inability to work and impacts of serious medical conditions, with some customers having to face debt collection activities while waiting for the bank to respond to their hardship notices, ASIC said.
“ASIC is seeking declarations, pecuniary penalties, and adverse publicity orders against Westpac from the Court.”
Over the alleged period of breach, Westpac had received about 630,000 applications for hardship assistance, the company told Reuters, adding that once the incident was brought to light it chose to self-report it to ASIC.
($1 = 1.5482 Australian dollars)