Finance Regulator Taking Westpac to Court over Hardship Cases
ASIC Sues Westpac over Alleged Mishandling of Customer Hardship Requests
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
Australia’s oldest bank, Westpac, is facing legal action as the Australian Securities and Investments Commission (ASIC) alleges that it failed to respond to financial hardship notices from hundreds of customers.
The civil action, which involves 229 impacted customers, will be launched in the Federal Court this week.
According to ASIC, between 2015 and 2022, these customers did not receive a response to their hardship notices within the required 21-day timeframe. The regulator believes that submitting a hardship notice, which leads to a change in the credit contract, can serve as a crucial lifeline for individuals facing challenging financial circumstances.
"Westpac’s failures to respond to these notices compounded their customers’ difficult financial circumstances," stated ASIC deputy chair Sarah Court, emphasizing the adverse impact caused by the bank's negligent handling of the situation.
Importance of Timely Response to Hardship Notices
ASIC's decision to take legal action against Westpac highlights the significance of lenders promptly addressing hardship notices to minimize harm to their customers. Under the National Credit Code, lenders are required to notify customers signaling hardship within 21 days if they do not agree to modify the current contract or if they require additional information to make a decision.
In addition to the delayed responses, ASIC further alleges that Westpac did not adequately investigate and address system issues affecting its online hardship notification process.
In response to the allegations, Westpac acknowledged a technology failure, citing a high volume of approximately 630,000 hardship assistance applications between 2015 and 2022. The bank expressed regret for failing to provide the necessary support to some of its customers during this time.
Westpac's group chief information officer, Scott Collary, stated, "For this, we are deeply sorry." He confirmed that the bank had reached out to the affected customers as part of a comprehensive remediation program costing $900,000, which included refunds of fees and interest, debt waivers, and payments for non-financial loss. Westpac also disclosed the incident to the regulator.
The date for the first case management hearing is yet to be scheduled.
The Australian Prudential Regulation Authority (APRA) has announced a significant policy change aimed at curbing potential risks in the housing market. Effective February 2026, APRA will implement a cap on high debt-to-income (DTI) home loans, limiting such loans to 20% of new home lending portfolios. This move is designed to address concerns over escalating property prices and accelerated credit growth. - read more
Afterpay, a leading Australian buy-now-pay-later (BNPL) provider, has raised concerns over certain banking practices affecting its users. Reports indicate that some customers were advised to close their BNPL accounts to qualify for mortgages, only to be subsequently offered credit cards by the same financial institutions. - read more
Australia's major banks-Commonwealth Bank of Australia (CBA), National Australia Bank (NAB), Westpac, and ANZ-are undergoing a strategic shift by reducing their reliance on mortgage brokers. This move aims to protect profit margins in the face of low interest rates, rising operational costs, and intense competition in the home loan market. - read more
Welcome to our ultimate guide on maintaining a healthy credit score. Whether you're just starting your credit journey or you're an experienced borrower, understanding how to keep your score high is crucial. - read more
Pre-approval loans are a preliminary step in the loan approval process. They provide borrowers with a conditional commitment from a lender, indicating the maximum amount they are willing to lend, based on the borrower’s financial situation. - read more
Stepping into the realm of loans and finance can be a daunting endeavor, but it all begins with a solid foundation in personal budgeting. Understanding how to manage your money effectively is not just a skill—it’s a crucial aspect of securing financial stability and achieving peace of mind. By tuning in to your finances and preparing a thought-out plan, you’re setting the stage for a well-informed loan application process. - read more
Need Help Finding a Loan?
Find out now if you qualify and compare
rates, offers and options from multiple lenders - without a credit check!
All finance quotes are provided free (via our secure server) and without obligation. We respect
your
privacy.
Knowledgebase
Liquidity: The ease with which an asset or security can be converted into cash without affecting its market price.
