A remarkable aspect of multiple Westpac compliance failures detailed in court documents released by ASIC yesterday is how recent some of them were.
In the fees for no service matter, which concerns the charging of advice fees to the accounts of thousands of deceased customers, the statement of agreed facts presented to the court covers a period of 10 years up to October 2019.
That is nine months after the release of the Hayne royal commission report, which detailed fees for no service and the charging of the accounts of deceased customers as among the worst examples of misconduct it came across.
After Hayne, the banks promised to clean up their act. Westpac hasn’t and the court documents show it hasn’t because its systems are so poor that it can’t.
The proceedings dealing with the sale of duplicate insurance policies cover breaches of financial services laws up to May this year, despite attempts to fix the problem that go back to 2018.
“Westpac’s technology systems were unsatisfactory during the relevant period,” the court document says. And its approach to prevention was unsatisfactory. A May 2019 system warning about the sale of duplicate policies did not prevent staff creating them.
Some of the matters in the proceedings dealing with BT Funds Management charging commission that were banned did not come to light until last year.
And the “penalty period” for the matter involving inadequate disclosure of financial advice fees was 2019.
In December last year, APRA accepted an enforceable undertaking from Westpac after concluding that its efforts to deal with its risk management problems through its Customer Outcomes and Risk Excellence program have fallen short. The undertaking was to “lift substantially its efforts to address risk governance deficiencies”.
A year on, it appears not much has changed.
ASIC said in a statement: “The conduct and breaches alleged in these proceedings caused widespread consumer harm and ranged across Westpac’s everyday banking, financial advice, superannuation and insurance businesses.
“A common aspect across these matters has been poor systems, poor processes and poor governance, which is suggestive of an overall poor compliance culture within Westpac at the relevant time.”
The bank has admitted all the allegations and expects to remediate A$80 million to customers. ASIC and Westpac have submitted that penalties of $100 million are appropriate.