Westpac NZ has been fined $3.64m by the Auckland High Court for breaching lender responsibility laws after multiple system and process failures meant thousands of customers did not receive key information about their loans and agreed interest rate discounts.
The penalty, issued under the Credit Contracts and Consumer Finance Act (CCCFA), is the largest ever imposed under the legislation.
The CCCFA requires lenders to provide specific information to borrowers and, where applicable, guarantors at key stages of a loan, including at origination, during the term of the loan and whenever the loan is varied.
The Commerce Commission found Westpac failed to meet these disclosure obligations, leaving customers without information needed to make informed financial decisions.
Commerce Commission credit director Sarah Bartlett said Westpac had not invested in adequate systems and processes to ensure compliance. “This is the largest pecuniary penalty imposed under the Credit Contracts and Consumer Finance Act so far. [It] 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.” She said the investigation found shortcomings across the bank’s systems and oversight.
Justice Jane Anderson, who presided over the case, said Westpac’s failures stemmed from systems “set up in a way that was foreseeably deficient”. She noted that multiple steps could have prevented the harm, including adequate staff training, system changes and mechanisms to identify when disclosure or discounts had not been applied. The court also declared that Westpac breached responsible lending principles under section 9C of the CCCFA.
The penalty took into account Westpac’s agreement to admit the breaches before proceedings were filed, and its remediation efforts. The bank has reimbursed up to 11,398 affected borrowers a total of $2.67m, and the conduct also affected up to 3,012 guarantors. Bartlett said the outcome followed a “careful and thorough investigation” and noted the bank self-reported the issues, although timely and complete information was crucial to progressing the case.
Westpac said it worked promptly to close the compliance gaps identified and is in the final stages of remediation for affected customers. “Westpac co-operated fully with the Commerce Commission’s investigation and we are pleased to have resolved the matter,” a spokesperson said.