Two of Australia’s biggest banks are returning a collective amount of $21 million to their credit card holders after corporate watchdog Australian Securities and Investments Commission (ASIC) called them out for credit card charges and limits malpractice.
In two separate reports this week, the ASIC announced that Westpac and ANZ are due to refund millions of dollars to their patrons for certain credit card issues.
ASIC has called ANZ to refund $10.2 million to 52,135 business credit card accounts after they found that the bank failed and incorrectly disclosed interest rates, annual fees, interest-free periods and overseas transaction fees for their Business One credit card holders. The refund amount will include wrongly charged fees and interest.
ANZ’s Business One program was a credit card initiative for small businesses. According to ASIC, some of the instances of misinformation for the Business ONE credit card owners date back to 2009.
In response to ASIC’s order, ANZ has started contacting their patrons who are eligible for the refund. Refunds will be transferred directly to the customers’ accounts while those who have since left ANZ will be issued a bank cheque. ANZ has already updated their procedures and fee information to keep their patrons up-to-date about their fees.
On the other hand, Westpac has successfully refunded over $11.3 million to 3,400 of their credit card customers. This news comes after ASIC conducted a review of the bank in 2014, where the regulator found Westpac was sending out invitations to credit card holders to increase their credit limit.
Since the ASIC started its review of Westpac’s credit limit operations, the Australian government has amended its financial regulations to order all credit card providers such as Westpac and ANZ to stop sending credit card limit increase invitations to all their customers.
Assessments of whether a customer is eligible for a credit limit increase will now take into consideration the patron’s ability to repay the loan within the period prescribed by ASIC, rather than their financial capability to meet the minimum monthly or fortnightly repayment.
By 2016, Westpac updated their lending practices and systems in order to make a smarter decision on whether a customer is financially able to afford a credit card limit increase. Since the bank started its remediation program, about $3 million in fees and interests have been refunded and $8.3 million in Australian credit card balances have been waived.
In a statement, Westpac said,
Westpac is committed to lending responsibly. If we get something wrong we will acknowledge it and will put it right for our customers
