The Australian Securities and Investments Commission has alleged that in some cases customers were faced with debt collection by the bank while they were still waiting to get a response to their hardship notice.

ASIC claims Westpac did not do enough to investigate and rectify the systems issues plaguing its online hardship notification process.

ASIC said that over a seven-year period the customers did not receive a response to their hardship notice within the 21 days set down by law.

ASIC said all of the customers told the bank they were experiencing financial hardship.

“Many of these also told Westpac about their difficult circumstances and vulnerabilities, including their inability to work, the impacts of serious medical conditions or their carer responsibilities,” ASIC said.

“In some cases, customers endured debt collection activities by Westpac while waiting for the bank to respond to their hardship notices.”

ASIC deputy chair Sarah Court said submitting a hardship notice, which results in a change to the credit contract, can be a lifeline for people experiencing challenging financial circumstances.

“ASIC has taken this action to highlight the importance of lenders responding to hardship notices within the required timeframe to reduce harm to their customers. Westpac’s failures to respond to these notices compounded their customers’ difficult financial circumstances,” she said.

ASIC alleges that between 4 September 2017 and 20 March 2022, Westpac breached the National Credit Code (Code). Under the Code, a lender has 21 days to notify the customer if it does not agree to change the contract or if it requires further information to make its decision.

ASIC also alleges that Westpac breached the National Credit Act by failing to act efficiently, honestly and fairly when it came to responding to its customers’ hardship notices.

ASIC is seeking declarations, pecuniary penalties and adverse publicity orders against Westpac from the Court.

The date for the first case management hearing is yet to be scheduled.