Westpac to refund $11 million


A total of 13,000 Westpac owner-occupier customers are receiving a refund from the bank after a system error which saw interest-only home loans fail to automatically switch to principal and interest repayments at the end of the interest-only period.
The Australian Securities and Investments Commission (ASIC) said the effect of the error meant customers had not started paying principal on loans at the initial time agreed with the bank, which meant they now had a smaller period in which to repay the loan.
Remediation for the error on behalf of Westpac would include a refund of the additional interest paid, and a discount for the time remainder of the loan.
In response to the claims, ASIC acting chair, Peter Kell said banks had to ensure oversights did not affect customers.
“All banks should be reviewing their systems to ensure that they minimise the chance of any such errors occurring, and that any risks to customers are identified early,” he said.
“Greater regulatory scrutiny of interest-only loans has led to improvements in how lenders are providing these loans, including in lenders identifying system errors.”
“If past errors are identified, remediation needs to be timely, transparent and effective.”
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.