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Westpac to refund some credit card customers

Posted in 'Personal Finance' by Ben Ryland

23 February 2016

One of Australia’s largest credit card providers – Westpac has had to recently agree to refund a number of its credit card customers after not following industry guidelines re increasing customer’s credit card limits.

Westpac raised the limits on some customer’s credit cards without checking the employment status of the customer first. With responsible lending at the forefront of a lender’s mind, it is surprising that such a large credit provider would increase limits without sufficient inquiries into a customer’s employment status.

The Australian Securities and Investment Commission (ASIC) raised concerns with Westpac and its approach to credit limits on credit cards, with ASIC mainly concerned with how the banks’ credit limit practices were not aligned with industry wide obligations under the National Consumer Credit Protection Act. The main focus was on how Westpac used heavily automated processes when deciding to increase a credit card limit, without suitably checking the customer’s employment situation.

The commission said, "ASIC was concerned that Westpac failed to make reasonable inquiries about some consumers' income and employment status before increasing their credit card limit."

Following the agreement, Westpac has now introduced a series of new measures to ensure they are complying with the National Consumer Credit Protection Act and taking all reasonable steps when checking the employment status of a customer, before offering a credit card limit rise on their account. Westpac are also checking previous credit limit rises which were given to credit card customers following discussions with ASIC. The commission is naturally concerned with how long this practice has been used by the bank and whether further customers may need to be refunded. Westpac will review where reasonable steps were not made to check the income and employment status of a customer before changing the credit limit, and make refunds where they are due.

Ben Ryland

Ben has a degree in International Business and Management. Prior to working for us, Ben spent a year working for an IT firm in France. He writes on a wide range of issues across all areas of credit and personal finance.

Ben is a Senior Credit Analyst at checkmyfile.

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