Westpac Banking Corporation (Westpac) has been ordered to pay $26 million in civil penalties for failing to respond to customers who were facing financial hardship.
The Honourable Justice McEvoy ordered the penalty after finding that Westpac failed to respond to over 200 online hardship requests within the time required by law over nearly six years from 2017 to 2023.
Justice McEvoy said, ‘while the contraventions were not suggested to be deliberate and arose instead from inadequate systems and operational failures, I have accepted that they were grossly negligent’.
The requests were made by customers of Westpac and its subsidiaries St George Bank, Bank SA and Bank of Melbourne – who notified they were experiencing financial hardship and were struggling to meet repayments on products including home loans, credit cards, personal loans and car loans.
ASIC Deputy Chair Sarah Court said the penalty sent a clear message to Westpac and other lenders to step up and do better when responding to customers who ask for help.
‘Westpac failed the very customers who needed help when they needed it most,’ the Deputy Chair said.
‘These were customers who were asking for some breathing room for a range of reasons including domestic abuse, natural disasters, serious illness or the loss of their job.
‘Instead of providing a safety net for these customers, Westpac’s systemic failures let them slip through the cracks.’
Some customers waited for weeks beyond the legal deadline for a response; Westpac did not give a response to some customers at all.
‘When hardship requests are missed or delayed, the harm compounds and causes even greater customer stress.
‘As Australians contend with a higher cost of living, lenders must prioritise their customers, especially those who are struggling financially, and ensure they are given the protections they are entitled to under the law,’ the Deputy Chair said.
In his reasons, His Honour Justice McEvoy said, ‘I accept that Westpac’s contraventions in this case were very serious. They impacted many vulnerable customers and continued over an extended period. It may in fact be said that the circumstances faced by the affected customers means that their financial vulnerability cannot be overstated. As is apparent from the Banking Code of Practice, they were the very customers that the hardship provisions of the legislative scheme are designed to protect. Westpac’s conduct significantly undermined the legislative scheme.
‘A particularly serious aspect of Westpac’s contraventions is that they caused a number of customers to have adverse credit information recorded on their credit files, and debts to be sold to third-party debt purchasers who then engaged actively in conduct to pursue those debts. These circumstances add an additional layer of harm, and significance, to Westpac’s conduct.’
In rejecting Westpac’s submission that $10 million was an appropriate penalty, his Honour remarked that such a penalty ‘would be little more than derisory in the circumstances and therefore wholly inappropriate’.
Westpac made admissions of contravention in the proceeding and paid more than $1.7 million in remediation to affected customers, including refunds of fees and interest and compensation for non-financial loss.
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Background
Under the National Credit Code, customers who experience difficulties meeting repayments under a credit contract may give a lender notice of the customer’s inability to meet their obligations. A lender must decide whether to agree to change the contract.
Under s72(4) of the National Credit Code, a credit provider which does not agree to change a credit contract in response to a customer’s hardship notice must give the customer a notice advising them of that decision, the reasons the credit provider has not agreed, the contact details for the Australian Financial Complaints Authority (AFCA) and the customer's rights to complain under that scheme.
Under s47(1)(a) of the National Credit Act, lenders must do all things necessary to ensure credit services are provided efficiently, honestly and fairly. To meet that obligation, lenders must take steps to implement and maintain effective systems, processes and operations.
Westpac admitted it contravened s72(4) of the National Credit Code and ss47(1)(a) and 47(4) of the National Credit Act.
ASIC has taken decisive action against lenders for alleged breaches and alleged contraventions of their obligations towards borrowers, including:
NAB, and its subsidiary AFSH Nominees, which were ordered to pay a $15.5 million pecuniary penalty in August 2025 for failing to respond to customers’ hardship notices within the time required by law (25-165MR)
ANZ, which was ordered to pay $40 million for failing to respond to hundreds of customer hardship notices, in some cases for more than two years, and failing to have proper hardship processes in place (25-314MR)
Non-bank lender Resimac, for allegedly failing to provide appropriate care when responding to thousands of hardship applications as required by its credit license (25-081MR).
ASIC’s Moneysmart website has information for consumers on what to do if you are experiencing financial hardship. If you are unhappy with either the service received, or with your lender’s decision, you can make a complaint. If you have multiple debts, or would like help applying for financial hardship, contact the National Debt Helpline on 1800 007 007 to talk to a financial counsellor for free.
Moneysmart is supporting Australians struggling with the cost of living through its new cost-of-living hub. The hub gives Australians the resources they need to take a simple but powerful step to help manage cost of living pressures.
The Budget Planner guides users through their income and expenses, including the cost of housing, groceries, transport, insurance and entertainment, to create a clear picture of their finances and where there are opportunities to save.