Australia’s Westpac Shares Fall After $26 million ASIC Court Penalty
Synopsis
Westpac shares declined after the Federal Court described the bank’s handling of financial hardship requests as “grossly negligent”. ASIC alleged Westpac failed to respond to more than 200 customer hardship applications within legal timeframes between 2017 and 2023. The bank was ordered to pay a $26 million penalty, though analysts say the reputational impact may matter more than the fine itself. Westpac has apologised to affected customers and says it has already completed compensation, fee refunds and system upgrades aimed at improving hardship support services across its banking operations.
Westpac shares fell after a Federal Court ruling found the bank had acted unreasonably in managing hundreds of financial hardship requests over almost six years.
Key Highlights
- Westpac Banking Corp shares fell almost 2% on Wednesday.
- Bank's support for hardship was poorly handled, says Federal Court
- ASIC alleges Westpac took too long to respond to over 200 hardship requests
- Westpac penalised $26 million
- The bank says remediation and compensation programs have already been completed
Westpac Shares Fell After Bank was Handed A Penalty
Westpac shares slide as investors react to court action. The bank's shares fell about 1.8% to $35.96 during mid-afternoon trade, putting further pressure on the stock already underperforming in 2026 despite being up over the past 12 months overall.
The court action comes after the Australian Securities and Investments Commission alleged that Westpac responded to more than 200 online hardship requests beyond the times allowed by law. Reported from 2017 to 2023 and it affected customers across Westpac, St George, BankSA and Bank of Melbourne.
Court criticises hardship support failures
ASIC stated that customers who may have been affected were likely experiencing significant financial hardship associated with illnesses, job losses, natural disasters and domestic violence when they contacted the banks for help with home loans, personal loans, car loans and credit card payments. But Federal Court Justice Timothy McEvoy found the bank had not acted wilfully, he described it as grossly negligent.
The findings have resulted in a $26 million penalty against Westpac. Meanwhile, the fine is likely not to help the people and will only add to regulatory scrutiny as investors watch out for major Australian lenders.
Bank says remediation already completed
Westpac said it had contacted those affected, and was finalising remedial action that would include fee refunds, issuing debt waivers and making compensation payments. The bank also stated that it has improved its hardship support processes and upgraded online systems to ensure future requests are managed as easily as possible.
Westpac nevertheless, reported a first half net profit of $3.4 billion, which is 3% year one year and declared an interim dividend of $.77 per share in August just before the latest blow. But the investors are unsure whether the news of the regulatory investigation could cause the bank to remain in the spotlight for weeks or months.
FAQs
- Why did Westpac shares fall?
Westpac ran into trouble after a Federal Court ruling that was highly critical of the bank in respect of its handling of hardship support requests.
- What were the allegations against Westpac by ASIC?
During that time, ASIC said the bank had an estimated 200 financial hardship requests outside of legal time frames.
- How much was Westpac fined?
Westpac was fined a $26 million penalty by the federal court.
- Has Westpac compensated affected customers?
Yes, Westpac said that it completed remediation programs which included refunds and compensation.
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