The Australian Securities and Investments Commission (ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term) has taken Westpac Banking Corporation to court for allegedly failing to respond to customer hardship notices within the 21-day period required by law. This lapse has reportedly affected 229 customers over a seven-year span, further complicating their already precarious financial situations.

The Scope of the ASIC's Allegations

ASIC contends that Westpac's online system for processing hardship notices was flawed, leading to response delays. These delays have profoundly impacted customers, many of whom were already grappling with challenges, such as unemployment, serious medical conditions, or caregiving responsibilities.

In Australian law, 'financial hardship' is defined as difficulty paying current bills or settling outstanding loans and credits regularly. According to local credit law, a person in financial hardship has the right to refinance their debt.

ASIC has commenced civil penalty proceedings in the Federal Court against Westpac Banking Corporation for failing to respond to customers’ hardship notices within the time required by law https://t.co/LmRgzO4kLW

— ASIC Media (@asicmedia) September 4, 2023

According to the National Credit Code (NCC), lenders have 21 days to respond to a customer's hardship notice. Failure to do so constitutes a breach of the NCC. Additionally, ASIC accuses Westpac of violating the National Credit Act (NCA) by not acting "efficiently, honestly, and fairly" in dealing with these notices. The regulator is now seeking various penalties against the bank, including financial penalties and adverse publicity orders.

A year ago, the bank faced another penalty of $83 million for charging fees to over 11,800 deceased customers. The judge stated that the bank "systematically" failed to address the shortcomings.

Consequences for Customers

While waiting for Westpac's response, some customers faced debt collection activities, adding to their financial strain.

"Submitting a hardship notice, which results in a change to the credit contract, can be a lifeline for people experiencing challenging financial circumstances," Sarah Court, the Deputy Chairwoman of ASIC, commented. She emphasized that timely responses from lenders are crucial to minimize customer harm.

The date for the first case management hearing has not yet been set. As ASIC highlights, this probe serves as a significant reminder for financial institutions to adhere to legal requirements, especially when their customers are in vulnerable situations.

This is not the first time ASIC has taken action against a financial institution for similar misconduct. A previous case against ClearLoans resulted in a $6 million penalty.

ASIC Eyes AI to Shield Australians from Financial Harm

Aussie financial watchdog is considering using artificial intelligence to enhance its efforts in tackling financial misconduct. The regulator aims to protect consumers and small businesses better by ramping up its enforcement activities. This move is a response to the increasing number of digital scams, unethical lending, and other forms of financial wrongdoing in the country. Alongside this, ASIC has unveiled a new Corporate Plan to guide its actions.

Known for its stringent enforcement measures, ASIC has pursued financial criminals actively. From the three years leading to June 2023, the agency has launched over 125 criminal cases, securing 92 convictions and 39 prison sentences.

In a related development, foreign financial service providers have been given an extended transitional period to obtain an Australian financial services license. Initially set to end in March 2024, the deadline has now been extended to March 31, 2025, offering these firms more time to comply with Australian regulations for wholesale client interactions.