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17-021MR Bankwest refunds almost $5 million for overcharging interest on home loans
Bankwest, a division of the Commonwealth Bank of Australia, has refunded approximately 10,800 customers more than $4.9 million after it failed to link offset accounts to home loan accounts for some customers who had open accounts between 2007 and June 2016, resulting in customers being overcharged interest.
Following media coverage of ASIC's work in relation to similar breaches by another bank, Bankwest undertook an internal investigation into the operation of its offset accounts. Bankwest identified issues in the linking of offset accounts with home loans and reported the matter to ASIC as a significant breach of its licence obligations.
ASIC Deputy Chairman Peter Kell said, 'It is critical that licensees ensure that their systems work properly so that promises made to customers about their bank accounts are kept.
'When a problem is identified, licensees not only have an obligation to report the breach, but impacted customers must be returned to the position they would have been in, had the breach not occurred.'
Bankwest has since updated its systems and processes, including the automatic linking of new offset accounts.
Bankwest has contacted those customers it has identified as being affected to explain the impact and has arranged refunds.
Customers with queries or concerns about this matter should contact Bankwest Customer Help Centre on 1300 334 805 (for retail customers), or the Bankwest Business Support Centre 13 7000 (for business customers). Alternatively, customers can complete an online form here.
An offset account is a savings or transaction account that, when linked to a home loan, offsets the balance of the loan account, reducing the interest payable.
For example, a customer with a home loan of $500,000 and a balance of $20,000 in their offset account, would only pay interest on $480,000. If accounts are not properly linked, the customer would be charged interest on the full loan amount of $500,000.
ASIC's MoneySmart website has useful tips and tools to help borrowers better understand and manage their home loan.