The Westpac Bank in New Zealand has agreed to pay a total of $3.7 million as compensation to over 19,000 customers affected by a credit card blunder.
In a press release, the bank and financial services provider admitted it has failed to provide its new credit card customers with a welcome letter containing disclosure information between May 2017 and March 2018. As a result, the bank was not able to extend the required initial disclosure of key information concerning the credit card terms of 19,365 customers.
Gina Dellabarca, Westpac NZ General Manager of Consumer Banking and Wealth, said that the lapse was due to “an error during an upgrade to Westpac’s IT systems.” She assured, however, that Westpac has “proactively identified the error” and has notified the Commerce Commission about the incident.
“We apologise to all the card holders affected and want to reassure our customers that our systems and processes have been upgraded,” Dellabarca said.
In July 2019, Commerce Commission has filed High Court proceedings against Westpac over its failure to perform its legal obligations. As part of the compensation, Westpac signed a settlement agreement that includes paying a total of $3.7 million to its affected customers and admitting in court that it had breached the Credit Contracts and Consumer Finance Act 2003.
Under current law, lenders are required to provide relevant information to customers in order to help them understand their rights and obligations before entering into any loan contract.
To date, Westpac NZ said it is currently contacting affected customers to inform them of the compensation payment.
The incident comes months after the bank refunded a total of $7 million to 93,000 customers after reaching an agreement with the Financial Markets Authority and Commerce Commission due to its failure to correctly discount fees on numerous banking packages.