ASIC has announced that following its review focussing on credit card providers’ invitations to customers to increase credit card limits, Westpac has reviewed its lending practices in response to ASIC’s concerns about its automated assessment methods.
ASIC was concerned that Westpac failed to make reasonable inquiries about some consumers’ income and employment status before increasing their credit card limit. In particular, ASIC was concerned that Westpac, in relying largely on its automated processes, was not making reasonable inquiries of individual cardholders, and in some cases relied only on information relating to expenditure and repayments.
Westpac has committed to a number of steps to address ASIC’s concerns including:
- Changing its credit limit increase processes to ensure that, at a minimum, reasonable inquiries are made about a customer’s income and employment status to ascertain their financial situation before the limit is increased.
- A remediation program involving a review of credit limit increases previously provided where a cardholder experiences financial difficulty, with consumer refunds paid where appropriate.
- Engaging an independent external expert to provide assurance of the effectiveness of the remediation program.
Westpac has also offered to make a contribution of $1 million over four years to support financial counselling and literacy.
When a customer applies for a credit card limit increase, the responsible lending obligations under Section 133 of the National Consumer Credit Protection Act apply.
Section 133BE of the National Consumer Credit Protection Act prohibits a credit provider from making an unsolicited written offer to increase a customer’s credit card limit unless the credit provider obtains the customer’s consent before sending an offer under section 133BF.
