ASIC sues Westpac for failing customers facing financial hardship

ASIC sues Westpac for failing customers facing financial hardship

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Westpac Banking Corporation (ASX: WBC) has been accused by the corporate regulator of failing customers who fell on tough times with allegations that the big four bank continued to undertake collections actions against them despite their requests for hardship assistance.

The Australian Securities and Investments Commission (ASIC) has launched Federal Court action against Westpac, arguing that it breached the National Credit Act by failing to act ‘efficiently, honestly and fairly’ in responding to hardship notices from its customers.

The legal action stems from Westpac’s dealings with customers between 2015 and 2022, during which it is alleged 229 Westpac customers did not receive a response to their hardship notice within the required timeframe of 21 days.

ASIC alleges that all of these customers had told Westpac they were experiencing financial hardship.

“Many of these customers also told Westpac about their difficult circumstances and vulnerabilities, including their inability to work, the impacts of serious medical conditions or their carer responsibilities,” says ASIC in a statement.

“In some cases, customers endured debt collection activities by Westpac while waiting for the bank to respond to their hardship notices.”

On top of alleged breaches of the National Credit Act, ASIC alleges that between 4 September 2017 and 20 March 2022 Westpac also breached the National Credit Code. The code relates to its alleged failure to issue a notice to borrowers within 21 days whether it agrees to change the lending contract or if it requires further information to make its decision.

In its submission to the Federal Court, ASIC alleges that online hardship notices during this period that were submitted by 448 customers were not sent to Westpac’s Customer Assist team for processing.

It says that on at least 229 occasions, Westpac did not give a written decision notice in response to an affected customer’s online hardship notice within the statutory timeframe.

“Submitting a hardship notice, which results in a change to the credit contract, can be a lifeline for people experiencing challenging financial circumstances,” says ASIC’s deputy chair Sarah Court.

“ASIC has taken this action to highlight the importance of lenders responding to hardship notices within the required timeframe to reduce harm to their customers. Westpac’s failures to respond to these notices compounded their customers’ difficult financial circumstances.”

ASIC claims that Westpac did not do enough to investigate and rectify the systems issues plaguing its online hardship notification process.

ASIC is seeking declarations, pecuniary penalties and adverse publicity orders against Westpac from the Court.

The date for the first case management hearing is yet to be scheduled.

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