Westpac agrees to make changes following regulatory criticism

Westpac has agreed to pay out AUD 1m ($690,000) following concerns expressed by Australia's financial regulator, the Australian Securities and Investments Commission (ASIC), that the bank may not have followed sensible lending rules when it used automated processes to assess applications for credit card limit increases. In addition to the AUD 1m ($690,000) paid by the bank, which will be spent over four years to improve financial literacy, the bank has also agreed to change its processes and has launched a review program that might result in compensation being paid to those in financial difficulties due the bank's behaviour.

Westpac may not have followed responsible lending rules when it used automated processes to assess customer applications for credit card limit increases, the corporate watchdog says.

The Australian Securities and Investments Commission on Wednesday revealed concerns that Westpac had failed to directly inquire about some credit card customers' income and job status when they were applying for a limit increase.

Westpac failed to adequately inquire about the income and employment of customers seeking credit card limit increases. Credit: Louise Kennerley

It said this failure to make reasonable enquiries about customers seeking credit was not consistent with responsible lending laws.

In response to these concerns, the country's second-biggest bank has changed its processes and launched a review program that may pay refunds to consumers who are in financial difficulty after having credit limits increased.