Westpac's exchange glitch costs $4M
Westpac New Zealand will refund $4 million to over 100,000 customers who were overcharged when getting cash out of Australian ATMs.
The bank has reached a settlement agreement with the Commerce Commission and Financial Markets Authority to repay past and present customers who were stung with large fees when withdrawing money from Westpac ATMs across the ditch.
The Fair Trading Act breach, self-reported by Westpac in late 2014, relates to foreign exchange charges the bank imposed on its customers who withdrew cash with debit cards in Australia between October 2012 and August 2014.
Westpac told its customers that Australian ATM transactions would be processed and converted into New Zealand dollars using a rate of exchange fixed by Visa or Mastercard, but then proceeded to charge a higher exchange rate.
Commissioner Anna Rawlings said it was pleased Westpac had taken action to inform regulators to ensure the matter was properly resolved.
"Having reviewed Westpac's internal investigation and the information they have provided us, we are satisfied they did not set out to mislead their customers," Ms Rawlings said.
"While the overcharged fees are small for individuals, cumulatively it could have generated several million dollars in profit for Westpac."
Under the settlement agreement, Westpac will seek to compensate approximately 108,000 former and current customers who were each overcharged more than $5.
An additional 60,000 customers were overcharged less than $5, with the $125,000 owed to this group to be donated to the Mangere Budgeting Services Trust in south Auckland.
Any balance remaining as a result of Westpac being unable to contact and compensate former customers, including deceased customers, will also be donated to the trust, Ms Rawlings said.
The commission will monitor Westpac's compensation payments, but does not intend to take any further action.