Courts rules Westpac failed to meet disclosure obligations in eight separate areas
Westpac New Zealand has been ordered to pay a $3.64 million penalty after the High Court ruled that the bank breached multiple consumer protection provisions under the Credit Contracts and Consumer Finance Act (CCCFA).
The judgment, handed down on 27 November 27, related to systemic failures in Westpac’s loan systems which resulted in thousands of customers not receiving legally required information about changes to their loan terms and interest rates.
The case was brought by the Commerce Commission and marks one of the largest penalties imposed under the CCCFA to date.
Justice Anderson found that between 2015 and 2023, Westpac failed to meet its disclosure obligations in eight separate areas, including both home and personal loan maintenance, guarantor communications and interest rate discount agreements.
While Westpac self-reported the breaches in 2022, the court noted that the bank’s systems had been deficient for years, exposing up to 5,001 borrowers and 3,012 guarantors to potential harm during the penalty period (starting December 2019).
The breaches stemmed from deficiencies in three of Westpac’s core systems: the LM System, the NZLO System, and the Nomis Deal Manager (NDM). These platforms were not configured to automatically trigger disclosure obligations when key changes – such as interest rate adjustments or guarantee liabilities – were made.
In some cases, discounts on floating interest rates were silently removed, resulting in $1.55 million in customer overcharges during the penalty period alone.
While the judgment emphasised that the conduct was not deliberate, the court criticised Westpac for failing to identify the issues earlier and for relying on staff to manually identify disclosure obligations – a practice deemed “inherently risky” given the scale and complexity of the systems involved.
The court acknowledged Westpac’s remedial efforts, including customer compensation, system fixes and updated disclosure processes.
The bank refunded impacted customers and paid use-of-money interest, with remediation payments totalling over $1.86 million for the floating rate discount issues alone.
The final penalty was reduced from a starting point of $5.2 million thanks to Westpac’s cooperation and remediation efforts.
In a statement following the ruling, Westpac said: “As first reported in August, Westpac NZ self-reported to the Commerce Commission historical issues with some Westpac products in early 2022. The issues relate to compliance with the responsible lending provisions of the Credit Contracts and Consumer Finance Act (CCCFA) for some customers.
“We worked promptly to close the identified compliance gaps, and we are in the final stages of completing remediation for customers as applicable… Westpac co-operated fully with the Commerce Commission’s investigation and we are pleased to have resolved the matter.”
