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Westpac chief executive Peter King has vowed to tackle widespread compliance problems by pushing ahead with a cultural overhaul, as the bank faces $113 million in fines for scandals including the charging of 11,000 dead clients for financial advice.
In an unprecedented move, the Australian Securities and Investments Commission (ASIC) on Tuesday launched six lawsuits against the bank simultaneously, listing “systemic failures” across its banking, super, insurance and financial advice businesses.
Westpac is facing six ASIC lawsuits for multiple breaches.Credit:James Alcock
Westpac admitted to all the misconduct alleged and said customers would be fully compensated to the tune of $80 million, as ASIC said it would seek $113 million in penalties from the courts.
Of the six cases, the one expected to attract the biggest penalty involved the bank charging $10 million in fees for financial advice over a decade to 11,000 clients who had died. Westpac only became aware of the problem when the royal commission revealed other banks including Commonwealth Bank had also been charging the dead.
The lawsuits are another blow for Westpac as it tries to recover from a tumultuous two-year period since it was hit by a money laundering compliance scandal in late 2019, while its core retail bank has also underperformed.
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As ASIC urged Westpac to urgently improve its systems, Mr King said a root cause of its compliance problems was that it had not put enough emphasis on risk management “in the cultural thinking of the organisation,” and he asked for patience in dealing with its problems.
“We need a change in the culture, culture takes time, but I’ve got to stay the course. I’ve got to fix this properly, I know that people would like to see that faster, but I’ve got to make sure it’s a sustainable change in our culture,” Mr King said in an interview.
He said several of ASIC’s court cases related to wealth businesses which the bank had sold, such as its insurance and financial advice units. He admitted the bank had got it wrong, and in relation to the fees charged to dead people, Mr King said: “It was awful. You don’t want to not meet promises to customers, and we didn’t meet our promise to customers in that case.”