Westpac has been stung with total A$113 million in fines for regulatory breaches across almost its entire financial services suite following a ruling in the last of six civil cases handed down in the Australian Federal Court last week.
Justice Beach ordered Westpac to pay A$40 million for charging financial advice fees to more than 11,800 dead customers, ending a legal assault that has already seen the bank fined $73 million for multiple compliance breaches in its superannuation, insurance, wealth management and banking divisions
The decision follows charges brought against the bank by the Australian Securities and Investments Commission (ASIC) in the wake of the 2019 Royal Commission into financial services.
In a statement, ASIC deputy chair, Sarah Court, said: “… the breaches found by the Court in these six cases demonstrate a profound failure by Westpac over many years and across many areas of its business to implement appropriate systems and processes to ensure its customers were treated fairly.
“Westpac, like all licensees, has an obligation to be honest and fair in its provision of financial services. Despite this, Westpac failed to prioritise and fund the systems upgrades necessary to help fulfil this obligation.”
She said Westpac continued to charge advice fees to dead customers even after the Royal Commission findings with the bank citing administrative system problems.
“Consumer harm caused by systems failures is unacceptable. Financial institutions must invest in systems that allow them to meet their obligations to customers. ASIC expects the industry to do this work quickly and efficiently,” Court said. “Consumers are entitled to be confident that the compliance systems of the financial services firms they trust with their financial security are up to standard.”
Aside from charging dead clients, Westpac was fined for compliance breaches in: general insurance (A$15 million); advice fee disclosure (A$6 million); life insurance in super (A$20 million); credit card debt practices (A$12 million); and, maintaining deregistered company bank accounts (A$20 million).
Westpac has largely exited its problematic businesses since the Royal Commission, selling its financial advice and insurance units, for example. The bank is also looking to offload the final pieces of its wealth management puzzle this year with both the BT superannuation and investment platform businesses set to go.
Last week the bank wrote down the value of the BT superannuation business, which currently has about A$37 billion under management, by A$154 million to zero ahead of an imminent change of ownership.
The Sydney Morning Herald (SMH) reported that Westpac would receive “no financial consideration” for selling the superannuation funds.
“Regulatory changes that have reduced margins to a sliver increased competition have conspired to render BT superannuation almost unable to generate a profit from fees after expenses are taken into account, according to sources familiar with the process,” the SMH article says.
But Westpac could fetch up to A$1 billion for its Panorama investment platform business (once known as BT Wrap), which has about A$155 billion in assets under administration.
Both the BT super and Panorama sales process are well-advanced, leaving the Westpac NZ KiwiSaver and investment business (operated under the BT banner) as unique wealth management assets on the bank’s balance sheets.
It is understood at one stage, the NZ investment and KiwiSaver assets were to included as part of the Westpac Australia BT super sale.