The Federal Court has ordered Westpac to pay $26 million in civil penalties after finding the bank failed to respond to more than 200 financial hardship requests within the legally required timeframe between 2017 and 2023, in what the court described as serious and systemic failures affecting vulnerable customers.
Justice McEvoy handed down the penalty after determining the bank’s failures stemmed from inadequate systems and operational shortcomings, describing the conduct as “grossly negligent” despite not being deliberate.
The affected customers included clients of Westpac and subsidiaries St George Bank, Bank SA and Bank of Melbourne, who had sought hardship assistance while struggling to meet repayments on home loans, credit cards, personal loans and car loans.
Many customers had turned to the bank during periods of acute financial distress, including after losing employment, experiencing serious illness, escaping domestic abuse or dealing with the impacts of natural disasters.
Deputy ASIC chair, Sarah Court, said the case highlighted serious failures in how vulnerable customers were treated and warned lenders they needed to improve hardship processes as cost-of-living pressures continued to weigh on households.
“Westpac failed the very customers who needed help when they needed it most,” she 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.”
Under the National Credit Code, lenders are required to respond to hardship requests within prescribed timeframes and provide written reasons if they decline to alter a customer’s credit contract.
According to the regulator, some Westpac customers waited weeks beyond the legal deadline for a response, while others received no response at all.
Court said delays to hardship requests compounded financial stress for customers already facing significant financial strain.
“When hardship requests are missed or delayed, the harm compounds and causes even greater customer stress,” Court added.
“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.”
In the judgment, Justice McEvoy said the breaches were “very serious” and had significant impacts on vulnerable customers over an extended period.
“I accept that Westpac’s contraventions in this case were very serious. They impacted many vulnerable customers and continued over an extended period,” Justice McEvoy said.
“It may in fact be said that the circumstances faced by the affected customers means that their financial vulnerability cannot be overstated.”
The court also highlighted the downstream consequences of the bank’s failures, with some customers having adverse credit information recorded against them or their debts sold to third-party debt purchasers that actively pursued repayment.
“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,” Justice McEvoy said.
“These circumstances add an additional layer of harm, and significance, to Westpac’s conduct.”
Justice McEvoy also rejected Westpac’s submission that a $10 million penalty would be appropriate, stating such a figure “would be little more than derisory in the circumstances and therefore wholly inappropriate”.
Westpac admitted breaching provisions of the National Credit Code and National Credit Act, including obligations requiring lenders to provide credit services “efficiently, honestly and fairly”.
The bank has already paid more than $1.7 million in remediation to affected customers, including refunds of fees and interest alongside compensation for non-financial loss.
In a statement provided to Investor Daily, a Westpac spokesperson said the bank “acknowledges the Court’s decision”.
“We again apologise to any customers who were affected. We are deeply sorry we let them down,” the spokesperson added. “We self-reported these issues in 2022 and 2023 and to put things right, we’ve completed a remediation program including refunds of fees and charges, debt waivers and payments for non-financial loss.
“We have strengthened our processes and upgraded our online hardship systems to meet the standards our customers deserve.
“Over the period in question Westpac received approximately 695,000 requests for hardship assistance. We take our obligations seriously and have taken action to ensure we help our customers when they need it most.”
The action adds to a growing series of enforcement measures pursued by ASIC against lenders over hardship handling failures.
Last year, NAB and subsidiary AFSH Nominees were ordered to pay $15.5 million in penalties for failing to respond to hardship notices within required timeframes, while ANZ was ordered to pay $40 million over failures affecting hundreds of customers, in some cases for more than two years.
ASIC has also launched proceedings against non-bank lender Resimac over alleged shortcomings in its handling of hardship applications.
Over the second half of 2025, ASIC figures showed $349.8 million was secured in court-ordered civil penalties, with the major banks accounting for the largest share of enforcement action.
These figures showed that the regulator had achieved its highest six-month civil penalty total following successful cases against the major banks along with action involving industry super fund Cbus, RAMS Financial Group and Australian Unity Funds Management.
All I saw here was another inadequate fine for doing the wrong thing.
100% the bank made 5 times as much by acting this way over the 6 years.
System is a joke.