<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The Federal Court has ordered Westpac Banking Corporation to pay a $26 million civil penalty after leaving vulnerable customers facing financial hardship in the lurch.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The ruling comes after the Australian Securities and Investments Commission (ASIC) launched legal action against the banking giant for failing to respond to more than 200 online hardship requests within the legally required timeframe over a six-year period between 2017 and 2023.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The affected customers belonged to Westpac and its major regional subsidiaries, including St George Bank, Bank SA, and Bank of Melbourne. </span></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/capital-gains-tax-discount-changes-australian-business-owners-being-lured-to-united-states-or-new-zealand/631bddd6-b7df-4456-a707-7599ffb9c2d7" rel="" target="" title="Australian bosses warn of mass exodus to NZ and USA"><strong><span>Australian bosses warn of mass exodus to NZ and USA</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>All customers had formally notified the bank that they were struggling to meet repayments on home loans, credit cards, personal loans, and car loans.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Federal Court Judge Timothy McEvoy rejected Westpac's submission that a $10 million fine was appropriate, labelling that figure "little more than derisory" and "wholly inappropriate".</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>In his judgment on Tuesday, Justice McEvoy noted that the breaches were not deliberate and instead stemmed from inadequate systems and operational failures.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/national/westpac-cops-26-million-penalty-over-grossly-negligent-hardship-failures/38d30063-2749-40fd-bfdd-bd5f8ab05751" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>However, he still found the bank's conduct to be "grossly negligent".</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"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.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"It may in fact be said that the circumstances faced by the affected customers means that their financial vulnerability cannot be overstated... Westpac's conduct significantly undermined the legislative scheme."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The court heard that the bank's failures resulted in severe, real-world consequences. </span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>A number of distressed customers had adverse credit information wrongfully recorded on their files. In other instances, Westpac sold the debts to third-party collectors who actively pursued the vulnerable borrowers.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>LIVE UPDATES: </span></strong><a href="https://www.9news.com.au/world/us-israel-iran-war-live-updates-may-27-donald-trump-latest-world-news-headlines/8a193af4-9f50-47d9-94e0-41f86bd51fdc"><strong><span>Trump's plan to withdraw units from allied countries</span></strong></a><span></span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>ASIC Deputy Chair Sarah Court said the multi-million dollar penalty should serve as a stark warning to the entire banking sector to drastically improve its customer service operations.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Westpac failed the very customers who needed help when they needed it most," Court said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"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."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Court said that some applicants were left waiting for weeks after the legal deadline, while others received no response at all.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"As Australians contend with a higher cost of living, lenders must prioritise their customers, especially those who are struggling financially," she said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Westpac admitted to the breaches, which violated the National Credit Code and the National Credit Act's mandate to provide services "efficiently, honestly and fairly".</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The bank has since paid more than $1.7 million in remediation to affected customers, covering fee and interest refunds alongside compensation for non-financial loss.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>A spokesperson for the bank said: "Westpac acknowledges the Court's decision. We again apologise to any customers who were affected. We are deeply sorry we let them down."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"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.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"We have strengthened our processes and upgraded our online hardship systems to meet the standards our customers deserve."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>The ruling marks the latest scalp in an aggressive regulatory crackdown by the corporate watchdog against Australian lenders failing to support borrowers.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Westpac is the second major bank to face massive penalties recently for similar compliance disasters.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>ANZ was previously hit with a $40 million penalty for failing to respond to hundreds of customer hardship notices, leaving some waiting for over two years.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Meanwhile, NAB and its subsidiary AFSH Nominees were ordered to pay $15.5 million in August 2025 over legal timeframe failures.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Under Australian law, lenders are legally required to assess hardship notices and provide a formal response if they refuse to alter a credit contract, outlining the reasons alongside details for the Australian Financial Complaints Authority (AFCA).</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><em><span>If you are experiencing financial hardship or struggling with cost-of-living pressures, free support is available. You can contact the National Debt Helpline on 1800 007 007 to speak with a financial counsellor, or visit the federal government's Moneysmart website.</span></em></strong></div></div>