Westpac’s $65m error

Bank to repay short-changed customers

Westpac will fork out $65 million to refund 200,000 customers it has shortchanged as the horror year continues for Australia’s banking industry.

WESTPAC will fork out $65 million to refund 200,000 customers it has shortchanged as the horror year continues for Australia’s bungle-prone banking industry.

Australia’s second biggest bank yesterday afternoon said it had failed to provide the customers with discounts they should have received over the past seven years.

Westpac’s blunder affects customers with its Premier Advantage Packages, or Advantage Packages in the case of its regional offshoots, Bank of Melbourne, St George and BankSA.

Customers who have signed up for the package deals since 2010 are potentially impacted.

The bank said customers had been asked to “opt in” for discounts they should have received automatically, and it expects to pay back $65 million.

Westpac customer chief George Frazis yesterday said the bank had consulted with the corporate regulator, the Australian Securities and Investments Commission, after identifying its blunder.

“When we identified these issues we started the process of putting things right for customers. We also notified ASIC,” he said.

Customers did not need to contact the bank, Mr Frazis said. “Over the coming months, we will provide refunds, including appropriate interest,” he said. “The packages have since been simplified and all benefits automated.”

Mr Frazis said other benefits for customers with the packages had been applied correctly, including discounts on home loans and credit card rates, or lower costs for transaction accounts.

“Westpac apologises unreservedly for a process that did not suit customers,” he said.

“By automating the discounts, we have ensured that our customers will not be affected in this way again.”

It is the second time in a month Westpac has acted as a result of a review into its products and services.

Mr Frazis earlier this month announced the bank was scrapping “outdated” charges on some transactions and capping account-keeping fees.

The after-tax cost to Westpac of the discount bungle is expected to clock in at about $45 million, to be included in its results for the financial year ending last month.