ASIC takes Westpac to court over consumer credit insurance – About Your Online Magazine


Australia’s corporate regulator has filed a lawsuit against Westpac for alleged misleading and unfair sales of consumer credit insurance.

The Australian Securities and Investments Commission announced on Thursday that it had initiated civil proceedings against the bank in the Federal Court.

The action refers to the bank’s credit card repayment protection and flexible loan repayment protection policies, which are insurance products sold with credit cards and lines of credit.

ASIC claims that Westpac made false or misleading statements between April 7 and July 28, 2015 that customers agreed to purchase and were responsible for paying consumer credit insurance and that the bank had the right to charge .

The prizes were reportedly unlawfully debited to 384 customers.

The regulator also claims that the bank claimed the right to payment of insurance premiums that customers were not required to pay.

The bank also did not guarantee that its financial services would be provided “in an efficient, honest and fair manner” when it provided insurance to customers who had not agreed to acquire it and charged premiums on their accounts, it is alleged.

“Each customer was exposed to the risk of having to make payments illegally debited by Westpac on an ongoing basis. It was a real risk, given that each payment was relatively small and liable to go unnoticed, ”said ASIC in court documents.

“Customers were required to pay interest on any unpaid amounts that were added to the total amount due.

“In addition, each customer had placed on him the burden of complaining to Westpac and taking steps to end illegal debts in the customer’s account over which Westpac had control.

“On a broader level, Westpac’s conduct undermined confidence in the financial system.”

ASIC claims that the bank has failed to comply with financial services laws and is asking the court to make statements to that effect and issue financial penalties.

In a statement to the Australian Stock Exchange on Thursday, Westpac said it is carefully considering the claims.

“Westpac recognizes the procedures announced by ASIC today regarding the sale of consumer credit insurance products (CCI) to approximately 384 customers,” said the bank.

“The lawsuit is related to claims that Westpac has provided CCI to certain customers who have not ordered or agreed to purchase this product.

“Westpac is carefully considering these claims and is committed to working constructively with ASIC through the legal process.”

Westpac said it has not sold CCI products since 2019.

The lawsuit is part of ASIC’s measures to address consumer damage in insurance after its detailed review of consumer credit insurance by 11 major banks and other creditors.

The July 2019 regulator’s report concluded that the design and sale of consumer credit insurance was of low value, caused damage to the consumer, incorrectly charged consumers and had failed them systematically.

“ASIC’s in-depth investigations in late 2018 and 2019 found that creditors have unfortunately not changed policies and conduct to contain the damage to the CCI project and sale. As a result, we have initiated civil proceedings against Westpac, ”said ASIC vice president Karen Chester.

ASIC said it has secured more than $ 250 million in reparations for consumers harmed by the practices of offending creditors.

Its remediation program covering 11 major banks and other creditors returned, on average, more than $ 430 to more than 580,000 consumers.

“ASIC will continue to take action where we identify potential violations of the law where the design and sale of financial products to consumers fail the litmus test for … efficiency, honesty and fairness,” said Ms. Chester.

The date of the trial against Westpac has not yet been set.

Paula Fonseca