Vinay Karanam Westpac Bank has been called out by the Financial Markets Authority (FMA) for overcharging and misleading its customers, resulting in a $6.35 million shortfall across 24,621 accounts. The bank has since claimed that these issues have been addressed.
According to the FMA, Westpac acknowledged that customers who were entitled to benefits under its Employee, Gold, and Platinum packages did not receive the advertised discounts. This revelation was made in a statement released by the FMA on Monday.
Furthermore, both personal and business banking customers failed to receive benefits under another of Westpac’s promotional packages. The bank also did not honor agreed pricing for customers with a Business Transact Account.
Following the FMA’s announcement, Westpac issued a press release stating that these matters would be addressed in a High Court hearing next year.
A Westpac spokesperson mentioned, “Westpac self-reported these issues to the FMA and has been providing updates on customer remediation while cooperating with their investigation. All customers impacted by the package issues have been compensated, and we have worked fully and transparently with the FMA.”
The FMA explained that the Employee, Gold, and Platinum (EGP) packages were meant to offer discounts and preferential rates on Westpac’s services. However, when customers signed up for these packages, Westpac staff had to manually note their eligibility in the system. There was no process for ensuring that customers received the package benefits when they acquired additional products or services, nor was there guidance provided to employees on this matter.
The bank’s failure to address these issues resulted in frequent oversight, with up to 31% of customers being overcharged. Misleading pricing information was displayed to customers, falsely suggesting that benefits had been applied.
Personal and business customers experienced similar issues with other packages offered by Westpac. The result was widespread overcharging and misleading account statements. This affected up to 43% of eligible consumer customers and up to 32% of eligible business customers.
Westpac also applied incorrect charge codes for small business customers with a Business Transact Account, due to internal system errors that relied primarily on manual processes. These errors led to customers being overcharged by not receiving lower account maintenance fees or fee waivers that should have been applied to certain transactions.
Margot Gatland, the FMA’s Head of Enforcement, stated that Westpac’s errors stemmed from “deficiencies in its systems,” which prevented the bank from delivering the promised discounts. “Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises,” she said.
Despite these issues, the FMA acknowledged Westpac’s full cooperation throughout the investigation and the efforts it undertook to resolve the problems.
