Westpac has provided around $11.3 million in remediation to around 3,400 credit card customers after ASIC raised concerns about its credit card limit increase practices.
In 2016, ASIC announced that Westpac had agreed to improve its lending practices when providing credit card limit increases to customers to ensure that reasonable inquiries are made about customers' income and employment status (refer: 16-009MR).
As part of Westpac's commitment, it reviewed credit limit increases previously provided to affected cardholders where they subsequently experienced financial difficulty. Following this review, Westpac provided remediation to around 3,400 customers, which included refunds of around $3 million for fees and interest, and around $8.3 million in credit card balances waived.
Customers with questions about Westpac's refunds and remediation can contact, depending on the brand:
- Westpac 1300 363 503
- St.George 1300 369 877
- BankSA 1300 365 502
- Bank of Melbourne 1300 656 698
Westpac engaged an independent expert to provide assurance over the remediation program and has made the first two payments (of the $1 million total contribution) to support financial counselling and financial literacy, with further payments to follow in 2018 and 2019.
Background
In 2014 ASIC conducted a review focussing on credit card providers' invitations to customers to increase credit card limits. ASIC’s concerns with Westpac’s processes were identified through the course of this review.
The Government has introduced reforms into Parliament that will prohibit credit card providers from sending credit card limit increase invitations regardless of whether the consumer has provided their consent.
The Government’s reforms will also require credit card providers to assess whether a credit card limit might be unsuitable based on the consumer’s ability to repay the proposed credit limit within a period prescribed by ASIC, rather than the consumer’s ability to meet the minimum repayment.
Consumers who are experiencing difficulty in meeting their credit card repayments should speak to their lender. ASIC's MoneySmart website also has information for consumers about managing debt, as well as a credit card calculator to help them work out the fastest way to pay off their credit card.