The Australian Securities and Investments Commission (Asic) has started six civil penalty proceedings against Westpac in the Aussie federal court.
The proceedings, each the result of an individual Asic investigation, allege widespread compliance failures across multiple Westpac businesses, which occurred over many years and affected thousands of clients.
The allegations have been made against Westpac’s banking, superannuation and wealth management brands as well as its former general insurance business.
The six matters will now be separately considered and determined by the court.
Allegations
Some of the allegations filed against Westpac include:
- Fees for no service – deceased customers: Asic alleges that over a 10-year period, Westpac and related entities within the Westpac group, charged over A$10m (£5.4m, $7.1m, €6.3m) in advice fees to over 11,000 deceased customers for financial advice services that were not provided due to their death;
- Insurance in super: Asic alleges that Westpac subsidiary BT Funds Management charged members insurance premiums that included commission payments, despite commissions having been banned under the Future of Financial Advice reforms;
- Inadequate fee disclosure: Asic alleges that Westpac licensees BT Financial Advice, Securitor and Magnitude (all no longer operating) charged ongoing contribution fees for financial advice to customers without proper disclosure; and
- Deregistered company accounts: Asic alleges that Westpac did not have appropriate processes to manage accounts held in the names of deregistered companies.
Urgent improvement
Sarah Court, Asic deputy chair, said: “Asic is disappointed to have to yet again commence legal proceedings, on this occasion no fewer than six times, against a major bank.
“The conduct and breaches alleged in these proceedings caused widespread consumer harm and ranged across Westpac’s everyday banking, financial advice, superannuation and insurance businesses.
“A common aspect across these matters has been poor systems, poor processes and poor governance, which is suggestive of an overall poor compliance culture within Westpac at the relevant time.
“Customers are entitled to have trust and confidence in Westpac being able to deliver what it promises, without suffering financial harm. Westpac must urgently improve its systems and culture to ensure these systemic failures do not continue.
“It is unprecedented for ASIC to file multiple proceedings against the same respondent at the same time. However, these were exceptional circumstances. ASIC had numerous Westpac-related matters under investigation through the course of 2021, and we decided to expedite those matters for consideration by the court at the earliest opportunity.”
Penalty
Westpac has reached agreement with Asic to the six separate matters through agreed civil penalty proceedings filed in the Federal Court of Australia.
The entities will jointly submit agreed proposed penalties for each of the proceedings, totalling A$113m, subject to court approval.
Westpac will “continue to work cooperatively with Asic to resolve the proceedings as quickly as possible”, it said in a statement.
Peter King, Westpac chief executive, said: “As flagged, we have been working to resolve a number of outstanding regulatory matters before the bank. We have cooperated with Asic through the investigations and the process to get to this resolution today.
“This outcome is an important step forward for us as we continue to fix issues and build stronger risk foundations.
“In each of these matters, Westpac has fallen short of our standards and the standards our customers expect of us. The issues raised in these matters should not have occurred, and our processes, systems and monitoring should have been better. We are putting things right and unreservedly apologise to our customers.”