Australian Securities and Investments Commission v Westpac Banking Corporation (The Consumer Credit Insurance Case)

The Australian Securities and Investments Commission (ASIC) brought proceedings against Westpac Banking Corporation for 141 contraventions of sections 12DM(1) of the Australian Securities and Investments Commission Act 2001 and 912A(1)(c) of the Corporations Act 2001. These sections require a financial services licensee to comply with the financial services laws. The contraventions arose from Westpac's practice of selling credit products to customers and arranging for unsolicited consumer credit insurance policies to be issued to them, asserting a right to payment when there was no such right. The court had to determine whether declarations should be made and pecuniary penalties imposed. The court also had to consider whether the course of conduct principle applied and whether the agreed penalty was appropriate.

The court found that Westpac's conduct constituted a contravention of sections 12DM(1) and 912A(1)(c). Westpac admitted to 141 contraventions of these sections. The court found that Westpac's conduct in asserting a right to payment in standard form letters to customers constituted a contravention of section 12DM(1). The court also found that the course of conduct principle applied to the contraventions. The court considered various factors in determining the appropriate penalty, including the seriousness of the contraventions, the lack of care but not negligence, the non-systemic nature of the contraventions, the small losses incurred by customers, the absence of profit from the contraventions, Westpac's prompt reparation, Westpac's modifications to its compliance systems, Westpac's early admission of liability and cooperation with ASIC, and Westpac's contrition. The court concluded that the agreed penalty of $1.5 million was appropriate.

The court made the following orders: Westpac must pay a pecuniary penalty to the Commonwealth of Australia in respect of each declared civil penalty contravention in the total amount of $1.5 million, and Westpac must pay the plaintiff's costs. The parties agreed on the relief and penalty, and the court found that the agreed penalty was within the range of appropriate penalties. The court considered the need to impose a penalty that would act as a deterrent to Westpac and other financial institutions, but also took into account the various factors that mitigated the seriousness of the contraventions. The court found that the agreed penalty was an appropriate one.