Westpac to compensate customers $4m over debit card fees

Westpac to compensate customers $4m over debit card fees

Westpac New Zealand has reached a settlement agreement with the Commerce Commission and Financial Markets Authority (FMA) to repay over $4 million dollars to over 100,000 past and present customers who were overcharged debit card fees when withdrawing money from Westpac ATMs in Australia.

Westpac self-reported a potential breach of the Fair Trading Act to the Commission and FMA in late 2014. The potential breach relates to representations Westpac made about foreign exchange charges imposed on its customers who used debit cards to withdraw cash in Australia between October 2012 and August 2014.

Westpac told its customers that Australian ATM transactions would be processed and converted into New Zealand dollars using a rate of exchange fixed by the card schemes (i.e. Visa or Mastercard). Between October 2012 and August 2014 it charged a rate of exchange higher than that fixed by the card schemes.

Commissioner Anna Rawlings said the Commission was pleased Westpac had proactively informed regulators to ensure the matter was properly resolved.

“Having reviewed Westpac’s internal investigation and the information they have provided us, we are satisfied they did not set out to mislead their customers. While the overcharged fees are small for individuals, cumulatively it could have generated several million dollars in profit for Westpac,” Ms Rawlings said.

Under the settlement agreement, Westpac will seek to compensate approximately 108,000 former and current customers who were overcharged more than $5. An additional 60,000 customers were overcharged less than $5, and the sum attributed to this group – just over $125,000 – will be donated to the Mangere Budgeting Services Trust. Any balance remaining as a result of Westpac being unable to contact and compensate former customers, including deceased customers, will also be donated to the Trust.

The Commission will monitor Westpac’s compensation payments, but does not intend to take any further action in this case.

Background
Why are both the Commission and FMA involved in this settlement?
The conduct involved occurred during a period when the Commission still had primary jurisdiction for any misleading or deceptive conduct in the financial sector. As of 1 April 2014, the FMA assumed primary jurisdiction. The Commission works with the FMA in accordance with its Memorandum of Understanding.

ENDS

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