Westpac will pay a $3.25 million penalty following a High Court decision over misleading pricing representations that affected 24,621 customers. The bank admitted its conduct in civil proceedings brought by New Zealand’s Financial Markets Authority (FMA) in December 2024, acknowledging that it overcharged personal and business customers entitled to discounts under various package offers.
The breaches occurred under the Financial Markets Conduct Act 2013 and resulted in $6.35 million in overcharges. The affected customers had enrolled in Westpac’s Employee, Gold and Platinum (EGP) packages, other personal or business packages, or held Business Transact Accounts (BTA). In each case, Westpac failed to apply the agreed pricing, despite representing in account statements and renewal documents that the benefits had been delivered.
Westpac systems unable to deliver preferential pricing to customers
FMA Head of Enforcement, Margot Gatland, said, “Westpac’s issues stemmed from deficiencies in its systems that meant the bank failed to deliver contractually agreed discounts to their customers. Westpac used preferential pricing to attract and retain customers, without having systems that could reliably deliver on those promises.”
Customers eligible for the EGP packages did not receive the preferential rates and discounts across accounts, cards, and insurance policies. Westpac staff were required to manually note customer eligibility, but there was no process to track benefit application across new services. Up to 31 percent of eligible customers were overcharged.
Similar problems affected other package arrangements offered to personal and business banking customers. In these cases, between 32 and 43 percent of eligible customers received inaccurate pricing. Westpac provided account statements indicating correct charges, despite applying higher-than-agreed fees.
For business clients with BTA accounts, the issue centered on incorrect charge codes. Internal systems and manual processes failed to apply the agreed lower maintenance fees or relevant fee waivers. Statements issued to customers falsely reflected compliant pricing structures.
“While it had in place systems, the systems were insufficient”
Justice Venning, in his decision, stated, “I accept Westpac’s submission there is no suggestion that its conduct was deliberate or wilfully misleading, nor that there was any intention to intentionally deprive customers of benefits. While it had in place systems, the systems were insufficient.”
Westpac has since remediated the affected customers. The FMA confirmed that the bank fully cooperated during the investigation and took corrective action to resolve the systems issues.
Gatland added, “The $3.25 million penalty against Westpac reflects the number of customers affected. The relationship between financial institutions and their customers must be one of trust. Customers should rightfully expect to be treated fairly and that agreements between the two parties will be honoured.”