The Westpac Banking Corp (ASX: WBC) share price is sliding as the market gates swing open on Tuesday.
Shareholders in the big four banking constituent are witnessing an unwelcome surprise today. The Australian Securities and Investments Commission (ASIC) revealed this morning it will be bringing civil proceedings against Westpac, alleging the bank failed to uphold requirements on hundreds of financial hardship requests.
In early morning trade, shares in Westpac are trading at $21.70, down 0.6% from yesterday.
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Making an example out of this big bank
Less than a week ago, the corporate watchdog nudged lenders to ensure they support customers through financial hardship, penning an open letter to 30 large loan providers. ASIC's focus on this area has ramped up amid the rising number of people experiencing financial distress.
Today, the corporate regulator has taken further action to give credence to its warnings — backing up its bark with a bite.
According to its media release, ASIC will bring civil proceedings against Westpac in Federal Court. It alleges the bank failed to respond to online hardship notices submitted by 229 customers between 2015 and 2022 within the required time.
As per the National Credit Code, a lender must respond to the customer within 21 days of receiving a hardship notice.
It is believed many of these customers informed Westpac of the challenges they were facing. Customers described an inability to work, serious medical conditions, or carer responsibilities as contributing factors in their hardship requests.
Yet, some customers allegedly were confronted with debt collection undertakings while still awaiting an answer from Westpac.
Further detailing the claims, ASIC noted:
ASIC claims Westpac did not do enough to investigate and rectify the systems issues plaguing its online hardship notification process.
As a result, the corporate watchdog is seeking "declarations, pecuniary penalties and adverse publicity orders against Westpac from the Court".
Westpac's share price is still howling
The move from ASIC is not doing Westpac shares any favours today. However, the banking major has been in a place of pain compared to its peers far before today's news.
WBC chart by TradingView
The chart above shows that the Westpac share price has performed the worst out of the big four over the past five years. While Commonwealth Bank of Australia (ASX: CBA) shares (yellow) have gained 44.7%, Westpac (red) has fallen 21.5%.
