ASIC says Westpac Banking Corporation (Westpac) has refunded approximately $9.2 million to 161,414 customers after it failed to waive fees on Westpac and St. George branded savings and transaction accounts over six years.
For customers aged under 21 years, Westpac previously relied on staff to manually apply the following fee waiver benefits:
- a monthly service fee waiver for customers with a Westpac Choice transaction account; and
- a withdrawal fee waiver for customers with a Westpac Reward Saver account.
However, between May 2007 and April 2013, 133,045 Westpac Choice and Westpac Reward Saver accounts were opened for some eligible customers without the relevant fee waivers being applied.
Westpac also discovered that there were 28,369 customers under the age of 18 who were eligible for a St. George Complete Freedom Student transaction account (which has no monthly service fee), but instead held a standard St. George transaction account which charged a monthly fee.
Westpac reported this matter to ASIC under its breach reporting obligations in the Corporations Act. ASIC acknowledges the cooperative approach taken by Westpac in resolving this matter.
Compensation and systems changes
Westpac has now provided refunds to affected customers. The refund payments included an additional amount reflecting interest.
In addition to compensating customers, Westpac is enhancing the account opening process for these Westpac and St. George products to ensure all new eligible customers receive the relevant fee waivers. This includes automated application of the relevant fee waivers based on the customer’s date of birth submitted during the application process. Westpac also monitors this activity to ensure the correct treatment of eligible accounts.
ASIC Deputy Chairman Peter Kell said, ‘Financial institutions that offer products with benefits such as fee waivers must have effective and robust systems in place to deliver the promised benefits to consumers.’
‘Businesses that rely on manual processes to apply waivers, discounts and other benefits should carefully consider how they manage the risks of processes not being followed, including having appropriate controls and procedures in place.’
