Westpac faces charges over disclosure flaw

The Commerce Commission has filed High Court proceedings against Westpac, saying it did not give credit card customers all the information it was legally required to.

Westpac reported to the commission in March 2018 that it had failed to provide key initial disclosure information to 19,000 personal credit card customers when they first took out their credit cards between May 2017 and March 2018.

The commission alleges that due to a process error, when Westpac posted new credit cards to some customers, they did not also receive disclosure of the terms of credit. The commission is seeking a declaration that Westpac breached its initial disclosure obligations under the Credit Contracts and Consumer Finance Act and is seeking an order for the return of costs of borrowing to affected borrowers and an order for payment of statutory damages to affected borrowers.

Commission chair Anna Rawlings says this is an important case for the commission and borrowers ‘‘for clarifying the scope of lender liability to borrowers, in a situation where thousands of customers were not provided with initial disclosure required under the law’’.

‘‘The law provides for remediation for customers when their lender fails to give disclosure properly and in this case we are asking the court to determine whether Westpac breached its obligations, and if so, to decide how those statutory remedies should be applied.’’

Westpac said the problem was a result of an error during an IT upgrade.

‘‘Corrective disclosure was provided to these customers and we proactively notified the Commerce Commission. We also refunded fees and interest charges to customers who were in default, and have made changes to make sure this issue is not repeated,’’ a spokesman said in a statement.