Westpac pays price for boosting credit card limits
Westpac credit card clients whose credit limits were adjusted without adequate consultation, may receive refunds as part of a remediation process the bank has committed to.
The bank agreed to enter into a remediation programme that includes "proactive customer refunds, and a contribution of $1 million over four years to support financial counselling and literacy", after the Australian Securities and Investments Commission (ASIC) flagged concerns over its processes for boosting credit card limits.
ASIC reported that "Westpac, in relying largely on its automated processes, was not making reasonable inquiries of individual cardholders," which was not consistent with the responsible lending obligations under the National Consumer Credit Protection Act 2009.
In response to ASIC's concerns, Westpac has committed to:
- Changing its credit limit increase processes to ensure that, at a minimum, reasonable inquiries are made about a customer's income and employment status to ascertain their financial situation before the limit is increased;
- A remediation program involving a review of credit limit increases previously provided where a cardholder experiences financial difficulty, with consumer refunds paid where appropriate; and
- Engaging an independent external expert to provide assurance of the effectiveness of the remediation program.
AUTHOR
Nicholas O'Donoghue
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