Brought to you by:
Berkshire Hathaway Specialty Insurance
Berkshire Hathaway Specialty Insurance

ASIC launches Westpac CCI court action

Facebook Twitter LinkedIn Google

The Australian Securities and Investments Commission (ASIC) has started Federal Court action against Westpac, alleging it sold add-on consumer credit insurance (CCI) to customers who had not agreed to buy the policies.

The action, which seeks declarations and financial penalties, relates to credit card repayment and flexi-loan repayment protection policies sold to about 384 customers from April 7 2015 to July 28 2015.

The regulator two years ago released a review of CCI sales by 11 major banks and other lenders, finding sales practices and product design caused consumer harm and buyers were being incorrectly charged.

“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,” Deputy Chairwoman Karen Chester said. “As a result, we’ve commenced civil proceedings against Westpac.”

A remediation program covering the major banks and lenders has secured more than $250 million, returning on average over $430 to more than 580,000 consumers.

Ms Chester says ASIC actions are bringing transparency, deterrence and rectification to CCI misconduct.

“ASIC will continue to take action where we identify potential breaches of the law where the design and sale of financial products to consumers fails the litmus test of section 912A, efficiency, honesty and fairness,” she said.

In the Westpac case, ASIC allegations include that the company made false or misleading representations that customers had agreed to acquire and were liable to pay for products.

The regulator says the company failed to ensure its financial services were provided efficiently, honestly and fairly in supplying CCI to customers and debiting premiums when they had not agreed to acquire the products, and that it failed to comply with the ASIC Act.

Westpac, which stopped selling CCI products in 2019, today acknowledged ASIC’s proceedings.

“Westpac is carefully considering these claims and is committed to working constructively with ASIC through the court process,” it said.