Photo: RNZ / Cole Eastham-Farrelly
Westpac New Zealand has been penalised $3.64 million by the High Court for breaching lender responsibility rules.
It comes after Commerce Commission action for multiple failures leading to customers not receiving legally required information about their loans, and in some cases, agreed interest rate discounts.
The Commission's director of credit Sarah Bartlett said it was due to a failure to invest in adequate systems and processes.
The breach was self-reported by Westpac, which agreed to admit the breaches prior to the Commission filing proceedings.
The Commission said it was the biggest pecuniary penalty imposed under the Credit Contracts and Consumer Finance Act (CCCFA) to date.
"The pecuniary penalty sends a strong message not only to Westpac but to the consumer credit industry that continued failings to adequately invest in robust systems and compliance practices will not be tolerated and there are serious consequences for not complying with the Act," Bartlett said.
In a statement, Westpac said it worked "promptly to close the identified compliance gaps" and it was in final stages of completing remediation for affected customers.
"Westpac co-operated fully with the Commerce Commission's investigation and we are pleased to have resolved the matter," a spokesperson said.
Under the CCCFA, lenders must disclose specific key information to borrowers and in some cases, guarantors.
In the judgement, Justice Anderson found Westpac's failures related to systems that were "set up in a way that was foreseeably deficient".
"Multiple steps could have been taken to prevent the harm, including changes to the systems, adequate staff training, and mechanisms to identify and respond where disclosure was not provided, and discounts were not applied," the judgement said.
It said the penalty reflected Westpac remediating up to 11,398 affected borrowers a total of $2.67m.
The conduct also affected more than 3000 guarantors.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
