In a public update, the Corporate Regulator stated that it has commenced six civil penalty proceedings against Westpac in the Federal Court. The Westpac businesses against whom the allegations are made include its banking, superannuation and wealth management brands as well as Westpac’s former general insurance business.
The proceedings, each the result of an individual ASIC investigation, allege widespread compliance failures across multiple Westpac businesses, ASIC said.
The alleged conduct occurred over many years and affected many thousands of consumers, according to ASIC.
One of the matters to be determined by the Court relates to 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.
BT Funds Management represented that the insurance fees had been properly deducted from members accounts when in fact the insurance fees that were deducted included commissions that were not permitted, ASIC said in the statement.
“Some members also paid commissions to financial advisers via their premiums even though they had elected to have the financial adviser component removed from their account,” said the Corporate Regulator.
BT Funds is remediating over $12 million to over 8,000 affected members who were incorrectly charged, it said.
ASIC also alleges that Westpac licensees BT Financial Advice, Securitor and Magnitude charged ongoing contribution fees for financial advice to customers without proper disclosure.
The other matters which will be determined by the Court related to fees for no service in relation to deceased customers, charging customers for multiple insurance policies for the same property where there was no need for additional policies and its management of accounts held in the names of deregistered companies.
ASIC Deputy Chair Sarah Court said a common spect 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,” said Ms Court.
Ms Court said it was 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,” she said.
Westpac has admitted the allegations in each of the proceedings and will remediate approximately $80 million to customers.
is anyone surprised?
Westpac already agreed to settle these claims.