Westpac in hot water over credit
WESTPAC has been forced to stop offering increased credit limits to customers after concerns the bank was misleading clients.
These offers of an increase in credit card limits have now been withdrawn and modified following intervention by financial services regulator ASIC.
New laws enforced from July 1 2012 prohibit card issuers from sending unsolicited credit limit increase invitations to their customers unless the customer has consented.
According to financial services regulator ASIC, between February 2012 and March 2012 via email, credit card statements and its website, Westpac notified customers about changes to the law regarding credit limit increase invitations and requested that customers provide their consent to continue to receive credit limit increase invitations.
About 3700 customers provided their consent as a result of these messages.
ASIC formed the view that the messages were misleading as they suggested customers could miss out on extra money if they did not consent, and implied that they needed to "act urgently" which led to many not properly considering their options.
Under the changes to the law, customers can provide or withdraw their consent at any time. Further, regardless of whether they have consented to being sent credit limit increase invitations, customers can request a credit limit increase from their financial institution at any time.
On Tuesday, ASIC commissioner Peter Kell said the lender had said it would not rely on these consents to offer credit increases and contact all consenting customers who may have been misled.
The regulator said Westpac cooperated.
"ASIC will continue to carefully monitor industry implementation of important consumer protection reforms in the National Consumer Credit Protection Act," Mr Kell said