The High Court has fined Westpac New Zealand $3.64 million after the Commerce Commission took action due to several failures that resulted in customers not receiving legally mandated information about their loans and, in some instances, agreed interest rate discounts.
According to the commission’s director of credit, Sarah Bartlett, the issue arose from a lack of investment in sufficient systems and processes.
Westpac self-reported the breach and agreed to acknowledge it before the Commission initiated legal proceedings.
“The pecuniary penalty sends a strong message not only to Westpac but to the consumer credit industry that continued failings to adequately invest in robust systems and compliance practices will not be tolerated and there are serious consequences for not complying with the Act,” Bartlett said.
Westpac said it acted “promptly to close the identified compliance gaps” and was in the final stages of completing remediation for affected customers.
Under the Credit Contracts and Consumer Finance Act (CCCFA), lenders are required to disclose certain key information to borrowers and, in some cases, to guarantors.
Justice Anderson ruled that Westpac’s systems were designed in a manner that was predictably inadequate, leading to their failures.
“Multiple steps could have been taken to prevent the harm,” the judgement said.
This involves updating the systems, providing sufficient staff training, and implementing processes to detect and address instances where disclosure was missing and discounts were not granted.