The corporate regulator, ASIC, has initiated civil penalty proceedings against Westpac for its failure to promptly address customers' hardship notices, according to an official statement released on Tuesday morning.
ASIC's allegations state that between 2015 and 2022, 229 Westpac customers did not receive timely responses to their hardship notices, as required by regulations.
In the event of a conviction, Westpac may incur substantial financial penalties for its failure to swiftly address hardship notices.
This legal action comes on the heels of ASIC's recent move to issue an open letter to 30 major lenders, urging them to enhance their assistance for customers facing financial difficulties. The initiative follows a nearly 30% surge in calls to the National Debt Hotline compared to the previous year.
In a statement on Tuesday, ASIC's deputy chair, Sarah Court, emphasized the significance of lenders promptly responding to hardship notices in compliance with the law. She stated, "Submitting a hardship notice, which results in a change to the credit contract, can be a lifeline for people experiencing challenging financial circumstances. Westpac's failures to respond to these notices compounded their customers' difficult financial circumstances."
ASIC maintains that Westpac customers who submitted hardship notices were grappling with financial challenges, including inability to work, severe medical conditions, and caregiving responsibilities. In certain cases, customers even faced debt collection activities by Westpac while awaiting the bank's response to their hardship notices.
The allegations against Westpac span from September 4, 2017, to March 20, 2022, during which ASIC claims Westpac breached the National Credit Code. According to this code, lenders are obligated to notify customers within 21 days if they disagree with modifying the contract or require additional information for decision-making.
Additionally, ASIC alleges that Westpac violated the National Credit Act by not responding efficiently, honestly, and fairly to customers' hardship notices. The regulator contends that Westpac inadequately addressed the systemic issues affecting its online hardship notification process.
In response, ASIC seeks declarations, pecuniary penalties, and orders for adverse publicity against Westpac from the federal Court.
