Dr Claire Matthews: Massey University Banking Expert on Westpac's $6.3 million blunder

Westpac has made an expensive blunder – overcharging customers by $6.3 million. 

25,000 customers are affected. 

The Financial Markets Authority (FMA) has launched civil proceedings against the bank and both parties have agreed to resolve the matter. 

Massey University banking expert Dr Claire Matthews tells Tim Beveridge from a monetary perspective the mistake is not that big for Westpac, though may have a large impact on the customers affected. 

Matthews says this, along with recent action with Kiwibank and ANZ shows the FMA is being more proactive in its regulatory role. 

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
Now. Westpac has made a six point three million dollar
blunder that's left twenty five thousand customers out of pocket.
The bank's been going through the courts after the Financial
Markets Authority launched civil proceedings. Both parties have agreed on
resolving the matter, which could mean discounts and preferential rates
for those impacted. Massive University banking expert Clear Matthews joins me, Now,

(00:38):
good morning, more enertim how much of a mistake is
this for Westpac?

Speaker 3 (00:46):
It depends exactly what you're talking about. From a monetary perspective,
it's not really a heroibly big mistake, although it may
have had a bit of an impact for the customers affected.
But from systems perspective and what it demonstrates about their systems,
I think it's a bit of a bigger issue.

Speaker 2 (01:01):
Is it a case of mischievous, careless, incompetent or negligent.

Speaker 3 (01:08):
I think it's just careless. I think it's the fact
that they've relied on a manual system to ensure that
people are getting the discounts or special deals that they're
supposed to be getting as opposed to having a system,
you know, the computer system that's ensuring that it's being
applied where it's appropriate.

Speaker 2 (01:25):
So anne Zev and Kiwibank have also been in trouble
with the FMA recently. All these issues similar.

Speaker 3 (01:33):
Similar, but in different ways. Yes, So what it reflects
is that the FMA is having close conversations with the
banks and other financial institutions and they just think they've
got a lot more proactive in terms of their regulatory role.
And so they're talking to the financial institutions and talking
to them about things like this and making sure that

(01:55):
they are doing things right. So and if they're finding
that things aren't being done right, then.

Speaker 2 (02:00):
Taking action because it's not a case it there's a
bit of maths on. It's not a case of just
a few cents to these customers. It could be one
hundred or couple of undred bucks each, So I mean,
what would compensation look like.

Speaker 3 (02:14):
That will be a matter for FMA and Westpac. But
I suspect that at this stage all it will be
happening for the individuals is probably just getting the discount
that they were supposed to get and maybe with some
interest on top of that to reflect the fact that
it's been delayed. And then I understand that there's going
to be some penalty for Westpac that won't go to

(02:34):
the customers, but it'll be a penalty applied to west
Pack as well.

Speaker 2 (02:37):
We got any idea what that penalty might look like?

Speaker 3 (02:40):
No idea, No, I wouldn't want to spect that on
what the court might decide to do.

Speaker 2 (02:44):
Are these things? I mean, what's your take on? Obviously
there's the regulatory mistakes that they make, and obviously it
costs people, and there's compensation all that. How does do
you think this really has an impact in terms of
the PR and the image of the bank. So do
people sort of all group them in together.

Speaker 3 (02:59):
Is all bad? Well, arguably BESPR perspective is so bad
already that it just kind of confirms it in people's views.
In reality, everybody makes mistakes. The real the problem with
banks is that they've got so many customers and they
so big, and everybody sort of aware of them. The

(03:19):
mistakes that they make are kind of magnified from that perspective.
So I don't think it has a huge impact. And
particularly because it's careless as opposed in my view, rather
than you know, something they've set out to do to
deliberately try and cheat their customers. It's just that they
haven't had the best systems in paste.

Speaker 2 (03:37):
Do you think that Would you be confident that Westpac
are not going to make any more mistakes in next
little while?

Speaker 3 (03:42):
Oh, I'd like to think so, But no guarantees. I mean,
the reality is they've got people working for them, and
people make mistakes, so things happen, and a lot of
these things actually go back in time, So it's partly
it's because they're busy looking for things and so they
may find something else from you know, that's happened in
the past that they now need to sort out. So

(04:03):
I would hope not, But no guarantee.

Speaker 2 (04:05):
Fingers crossed. Clear, Thanks very much for your time. Clear
Clear Matthews of Massey University.

Speaker 1 (04:12):
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