The Westpac Banking Corp (ASX: WBC) share price will be one to watch on Thursday.
This follows the release of an announcement this morning which reveals that further civil proceedings have been brought against the banking giant.
What did Westpac announce?
This morning Westpac acknowledged that ASIC has commenced civil proceedings against the bank in relation to the sale of consumer credit insurance (CCI) between 7 April 2015 to 28 July 2015.
According to the release, the proceedings relate to the sale of CCI products to approximately 384 of the bank’s customers. The corporate watchdog alleges that Westpac supplied CCI to certain customers who had not requested or agreed to acquire these products.
The bank advised that ASIC is seeking, among other things, declarations of contraventions of certain civil penalty provisions and unspecified monetary penalties.
Westpac is carefully considering these claims and stated that it is committed to working constructively with ASIC through the Court process.
It also notes that it has not sold these products since 2019.
What did ASIC say?
ASIC went into a lot more detail than Westpac and has provided a thorough breakdown of the allegations.
It explained: “ASIC has commenced civil penalty proceedings in the Federal Court against Westpac Banking Corporation (Westpac), alleging it mis-sold consumer credit insurance (CCI) with credit cards, and other credit facilities, to customers who had not agreed to buy the policies.”
“ASIC’s action relates to Westpac’s Credit Card Repayment Protection and Flexi-Loan Repayment Protection policies which are add-on insurance products sold with credit cards and lines of credit.”
Between the aforementioned dates, ASIC alleges that Westpac made false or misleading representations that customers had agreed to acquire, were liable to pay for and that Westpac had a right to charge for, CCI products.
It also alleges that the bank asserted a right to payment for the CCI premiums which customers were not liable to pay.
In addition, it claims that Westpac failed to ensure that its financial services were provided efficiently, honestly, and fairly when it supplied CCI to customers who had not agreed to acquire them.
This ultimately means the bank failed to comply with financial services laws.
ASIC Deputy Chair, Karen Chester, said, “ASIC’s deep dive investigations in late 2018 and into 2019 found lenders had disappointingly not changed policies and conduct to stem harms from the design and sale of CCI. As a result, we’ve commenced civil proceedings against Westpac.”
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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.