Westpac New Zealand has admitted to overcharging more than 24,000 customers approximately NZ$6.35 million through systematic failures in its discount and benefits programs, according to court proceedings initiated by the Financial Markets Authority (FMA).

Westpac NZ Faces Court Over $6.35M Customer Overcharging Scandal

The bank acknowledged making misleading representations to customers through its Employee, Gold, and Platinum packages, as well as other business banking services. The violations occurred due to manual processing errors and inadequate system controls that failed to properly apply advertised discounts.

“Westpac’s issues stemmed from deficiencies in its systems that meant the bank failed to deliver to them contractually agreed discounts,” FMA Head of Enforcement, Margot Gatland, said. „Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises.”

The bank's internal processes relied heavily on manual record-keeping, with staff required to manually note customer eligibility for package benefits. This flawed system resulted in up to 31% of eligible customers not receiving their entitled discounts on subsequent products and services.

Impact on Business Customers

Small business clients holding Business Transact Accounts were particularly affected by incorrect charge codes, leading to higher maintenance fees and missed transaction fee waivers. Account statements incorrectly displayed these inflated charges as legitimate fees.

“The FMA acknowledges Westpac’s full cooperation throughout the FMA’s investigation, and the work it undertook to remedy the issues,” commented Gatland.

Westpac Faces Regulatory Challenges in Oceania

Westpac Banking Corporation has faced significant regulatory penalties in recent years. In 2020, the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced an agreement with the bank to impose a $1.3 billion penalty for breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). AUSTRAC highlighted that the fine reflects the severity and scale of Westpac's compliance failures.

More recently, in January 2024, the Australian Federal Court ordered Westpac to pay a $1.8 million penalty for engaging in unconscionable conduct during a $12 billion interest rate swap transaction in October 2016. This transaction, the largest in Australian financial market history, involved a consortium of AustralianSuper and IFM entities acquiring a majority stake in Ausgrid from the New South Wales Government.

Westpac New Zealand has admitted to overcharging more than 24,000 customers approximately NZ$6.35 million through systematic failures in its discount and benefits programs, according to court proceedings initiated by the Financial Markets Authority (FMA).

Westpac NZ Faces Court Over $6.35M Customer Overcharging Scandal

The bank acknowledged making misleading representations to customers through its Employee, Gold, and Platinum packages, as well as other business banking services. The violations occurred due to manual processing errors and inadequate system controls that failed to properly apply advertised discounts.

“Westpac’s issues stemmed from deficiencies in its systems that meant the bank failed to deliver to them contractually agreed discounts,” FMA Head of Enforcement, Margot Gatland, said. „Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises.”

The bank's internal processes relied heavily on manual record-keeping, with staff required to manually note customer eligibility for package benefits. This flawed system resulted in up to 31% of eligible customers not receiving their entitled discounts on subsequent products and services.

Impact on Business Customers

Small business clients holding Business Transact Accounts were particularly affected by incorrect charge codes, leading to higher maintenance fees and missed transaction fee waivers. Account statements incorrectly displayed these inflated charges as legitimate fees.

“The FMA acknowledges Westpac’s full cooperation throughout the FMA’s investigation, and the work it undertook to remedy the issues,” commented Gatland.

Westpac Faces Regulatory Challenges in Oceania

Westpac Banking Corporation has faced significant regulatory penalties in recent years. In 2020, the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced an agreement with the bank to impose a $1.3 billion penalty for breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act). AUSTRAC highlighted that the fine reflects the severity and scale of Westpac's compliance failures.

More recently, in January 2024, the Australian Federal Court ordered Westpac to pay a $1.8 million penalty for engaging in unconscionable conduct during a $12 billion interest rate swap transaction in October 2016. This transaction, the largest in Australian financial market history, involved a consortium of AustralianSuper and IFM entities acquiring a majority stake in Ausgrid from the New South Wales Government.