It follows the Federal Court yesterday ordering the Commonwealth Bank to pay a $7 million penalty after the court found CBA had made false or misleading representations and engaged in misleading and deceptive conduct through 12,119 occasions when it charged a rate of interest on business overdraft accounts substantially higher than what its customers had been advised.
ASIC said the latest court action related to Westpac’s Credit Card Repayment Protection and Flexi-Loan Repayment Protection policies which are add-on insurance products sold with credit cards and lines of credit.
It alleges that in 2015 Westpac made false or misleading representations that customers had agreed to acquire, were liable to pay for and that Westpac had a right to charge for the insurance.
ASIC is seeking declarations and pecuniary penalties from the Federal Court.
The date for the first case management hearing is yet to be scheduled by the Court.
ASIC said the court action formed part of ASIC’s priority to address consumer harms in insurance. It follows a detailed ASIC review of the sale of CCI by 11 major banks and other lenders which led to a report that revealed that the design and sale of CCI had consistently failed consumers. ASIC found that CCI was poor value, CCI sales practices and product design caused consumer harm and consumers were being incorrectly charged for CCI.
ASIC Deputy Chair Karen Chester said ASIC’s deep dive investigations in late 2018 and into 2019 found lenders had disappointingly not changed policies and conduct to stem harms from the design and sale of CCI.
“As a result, we’ve commenced civil proceedings against Westpac,” she said.
“In addition to our enforcement action, ASIC has secured over $250 million of remediation for the consumers harmed by the practices of the offending lenders. The CCI remediation program covers 11 major banks and other lenders and has returned on average over $430 to over 580,000 consumers. Our trifecta of regulatory action – our 2019 report, targeted investigations to initiate enforcement action and remediation – collectively brings transparency, deterrence and rectification to CCI misconduct.”
Westpac said the action related to 384 customers.
“Westpac is carefully considering these claims and is committed to working constructively with ASIC through the court process,” the bank said.