ASIC Fights for the Little Guy against Westpac for Hardship Notice Delays

<p>The
Australian Securities and Investments Commission (<a href="https://www.financemagnates.com/terms/a/asic/">ASIC</a>) has taken Westpac
Banking Corporation to court for allegedly failing to respond to customer
hardship notices within the 21-day period required by law. This lapse has
reportedly affected 229 customers over a seven-year span, further complicating
their already precarious financial situations.</p><p>The Scope of the ASIC's Allegations</p><p><a href="https://www.financemagnates.com/tag/asic/" target="_blank" rel="follow">ASIC
</a>contends that Westpac's online system for processing hardship notices was
flawed, leading to response delays. These delays have profoundly impacted
customers, many of whom were already grappling with challenges, such as
unemployment, serious medical conditions, or caregiving responsibilities.</p><p>In
Australian law, 'financial hardship' is defined as difficulty paying current
bills or settling outstanding loans and credits regularly. According to local
credit law, a person in financial hardship has the right to refinance their
debt.</p><blockquote><p lang="en" dir="ltr">ASIC has commenced civil penalty proceedings in the Federal Court against Westpac Banking Corporation for failing to respond to customers’ hardship notices within the time required by law <a href="https://t.co/LmRgzO4kLW">https://t.co/LmRgzO4kLW</a></p>— ASIC Media (@asicmedia) <a href="https://twitter.com/asicmedia/status/1698782232964669522?ref_src=twsrc%5Etfw">September 4, 2023</a></blockquote><p>According
to the National Credit Code (NCC), lenders have 21 days to respond to a
customer's hardship notice. Failure to do so constitutes a breach of the NCC.
Additionally, ASIC accuses Westpac of violating the National Credit Act (NCA) by
not acting "efficiently, honestly, and fairly" in dealing with these
notices. The regulator is now seeking various penalties against the bank,
including financial penalties and adverse publicity orders.</p><p>A year ago, the bank <a href="https://www.financemagnates.com/institutional-forex/westpac-faces-83-million-fine-for-several-lapses/" target="_blank" rel="follow">faced another penalty of $83 million</a> for charging fees to over 11,800 deceased customers. The judge stated that the bank "systematically" failed to address the shortcomings.</p><p>Consequences for Customers</p><p>While
waiting for Westpac's response, some customers faced debt collection
activities, adding to their financial strain. </p><p>"Submitting
a hardship notice, which results in a change to the credit contract, can be a
lifeline for people experiencing challenging financial circumstances," Sarah
Court, the Deputy Chairwoman of ASIC, commented. She emphasized that timely
responses from lenders are crucial to minimize customer harm.</p><p>The date
for the first case management hearing has not yet been set. As ASIC highlights,
this probe serves as a significant reminder for financial institutions to
adhere to legal requirements, especially when their customers are in vulnerable
situations.</p><p>This is not
the first time ASIC has taken action against a financial institution for
similar misconduct. A previous case against ClearLoans resulted in a $6 million
penalty. </p><p>ASIC Eyes AI to Shield
Australians from Financial Harm</p><p>Aussie
financial watchdog is considering <a href="https://www.financemagnates.com/forex/asic-eyes-ai-new-plan-to-shield-australians-from-financial-scams/" target="_blank" rel="follow">using artificial intelligence</a> to enhance its
efforts in tackling financial misconduct. The regulator aims to protect
consumers and small businesses better by ramping up its enforcement activities.
This move is a response to the increasing number of digital scams, unethical
lending, and other forms of financial wrongdoing in the country. Alongside
this, ASIC has unveiled a new Corporate Plan to guide its actions.</p><p>Known for
its stringent enforcement measures, ASIC has pursued financial criminals
actively. From the three years leading to June 2023, the agency has launched
<a href="https://www.financemagnates.com/forex/asic-reports-109m-in-civil-penalties-and-144-ongoing-cases-after-h1-2023/" target="_blank" rel="follow">over 125 criminal cases</a>, securing 92 convictions and 39 prison sentences.</p><p>In a
related development, foreign financial service providers have been given <a href="https://www.financemagnates.com/forex/no-afs-license-needed-until-2025-asic-extends-ffsps-transitional-relief-again/" target="_blank" rel="follow">an
extended transitional period</a> to obtain an Australian financial services
license. Initially set to end in March 2024, the deadline has now been extended
to March 31, 2025, offering these firms more time to comply with Australian
regulations for wholesale client interactions.</p>

This article was written by Damian Chmiel at www.financemagnates.com.