ASIC has decided to commence a legal case against Westpac Banking Corp (ASX: WBC) relating to consumer credit sales.
What’s happening?
Westpac acknowledged to the market today that the proceedings have been launched by ASIC regarding the sale of consumer credit insurance (CCI) products to 384 customers.
ASIC is alleging that Westpac supplied CCI to certain customers who had not requested or agreed to acquire this product.
ASIC is seeking, among other things declarations of contraventions of certain civil penalty provisions and unspecified monetary penalties for the period from 7 April 2015 to 28 July 2015.
Westpac said it’s carefully considering these claims and is committed to working constructively with ASIC through the court process.
The big bank told investors that it has not sold CCI products since 2019.
What to make of this for Westpac?
I’m no legal expert, so it’s very hard to say at this stage how much Westpac could be fined for this, but the relevant period and number of affected customers seems to be a lot smaller than what was uncovered in the Hayne Financial Services Royal Commission.
This isn’t good for the reputation of the big bank and past actions continue to plague the business. Hopefully the new risk governance plan that it’s going to enact will be enough to change the culture and stop the negative impacts to profit.
