Westpac hit with $1.5 million fine over credit insurance

The court found from April to July 2015, Westpac issued consumer credit insurance policies to 141 customers who did not request the product.

Each of these customers were sent a letter that asserted the insurance premiums needed to be paid and debited payment of these amounts from the customer’s credit card.

The court found Westpac did not have the right to these payments and customers were not liable to pay them.

Sarah Court, Deputy Chair of the Australian Securities and Investments Commission (ASIC), said the sale of the insurance only benefited Westpac.

“ASIC has identified consumer credit insurance to be a poor value product that leads to poor outcomes for consumers,” Ms Court said.

“In this case, customers were charged for insurance policies they had not agreed to buy and therefore were unlikely to use.

“The sale of these products benefitted the bank and not the consumer.”

Ms Court said today’s action was just one part of an industry-wide crackdown on consumer harms in insurance.

“ASIC has secured $270 million in remediation across the sector for consumers harmed by the sale of consumer credit insurance,” she said.

“The industry is now clearly on notice as to the consumer harm associated with the mis-selling of these products, and under the new penalty regime ASIC will be seeking significantly increased penalties for misconduct of this kind.”

In her judgement, Justice Anna Katzmann said Westpac’s contraventions were not “deliberate, reckless or systemic” but rather showed a “lack of care”.

“Westpac has not sold CCI products since 2019 and we have remediated the affected customers.

“We apologise to the affected customers and remain focused on putting things right and simplifying our business.

“Westpac and ASIC agreed a Statement of Agreed Facts and penalty amount of $1.5 million which the court has today approved.”