Westpac says a technology error was the cause of its failure to respond to customers’ hardship notices within the time required by law. The bank responded yesterday to an announcement by the Australian Securities and Investments Commission that it has commenced civil penalty proceedings against the bank. Westpac said that after it uncovered the problem it contacted the affected customers and completed a remediation program. The program included refunds of fees and interest, debt waivers and payments for non-financial loss, totalling around A$900,000. Westpac group chief information officer Scott Collary said in a statement: “We have strengthened our processes and are upgrading our online hardship applications.” The incidents occurred between 2015 and 2022, with 229 Westpac customers not receiving a response to their hardship notice within the required time of 21 days. ASIC said that in some customers were subject to debt collection activities while waiting for the bank to respond to their notices. ASIC claims that on 21 occasions the bank sold customer accounts to debt collectors while the hardship request was in progress. ASIC alleges that on 34 occasions the bank declined hardship notices on the basis that the customer had not provided sufficient information to assess their request, in circumstances where the customers’ online hardship notices, as affected by the system failure, had provided sufficient information. It also claims that in another 22 cases, the bank recorded adverse repayment history information on customer’s credit files, while their hardship requests were being processed. It claims that Westpac failed to maintain adequate systems and processes to receive and assess hardship notices, and that it did not do enough to investigate and rectify the systems issues affecting its online hardship notification process. ASIC said Westpac’s system for handling online hardship requests is still deficient – the result of having to deal with multiple legacy technology and underinvestment in technology infrastructure. Last week, ASIC wrote to lenders calling on them to make sure they provide appropriate support for customers experiencing financial hardship. The regulator said: “ASIC is seeing evidence that an increasing number of customers are experiencing financial distress and difficulty due to cost-of-living pressures. In this context, it is critically important that lenders have appropriate arrangements to respond to and support consumers experiencing financial hardship.” It cited a 28 per cent increase in calls to the National Debt Helpline, compared with the same time last year, and surveys indicating growing financial stress. It said financial hardship will be an area of increased focus over the coming year. It is collecting financial hardship data from 30 lenders and starting a review of 10 large home lenders to understand their approach to financial hardship. In March, the Banking Code Compliance Committee expressed concern over incidents involving delays in responding to hardship applications, failure to document and communicate outcomes, and ongoing collection activities when customers were in hardship arrangements. It reported that in the first six months to 2022, one major bank failed to respond to 1068 hardship requests from customers and another failed to respond to 247 requests within the required timeframe. These failings were caused by a