Why was Westpac (ASX:WBC) fined $26 million by the Federal Court?

The Federal Court ordered Westpac to pay the civil penalty after the Australian Securities and Investments Commission (ASIC) proved the bank failed to respond to customer financial hardship notices within legally mandated timeframes.

Which Westpac (ASX:WBC) brands were involved in the financial hardship compliance failures?

The legal infractions affected customers across Westpac’s broader group, including its core brand and several major retail subsidiaries. The compliance breakdowns occurred within Westpac, St George, BankSA, and the Bank of Melbourne.

What types of credit products were impacted by Westpac’s (ASX:WBC) operational failures?

The processing failures impacted a wide variety of consumer credit accounts where borrowers requested breathing room due to unexpected financial distress. Specifically, the affected products included home loans, credit cards, personal loans, and car loans.

Why did the court reject Westpac’s (ASX:WBC) proposed $10 million penalty?

Justice McEvoy rejected Westpac’s submission for a lower $10 million fine, labelling the figure "little more than derisory" considering the severity and duration of the breaches.

Was Westpac (ASX:WBC) found to have intentionally ignored customer hardship requests?

The Federal Court acknowledged that the compliance failures were not deliberate or intentional attempts to harm consumers. Instead, the court found the issues stemmed from inadequate computer systems and broad operational failures within the bank's infrastructure.

How does the $26 million ASIC penalty impact the investment thesis for Westpac (ASX:WBC)?

Financially, a $26 million fine is immaterial to a major bank of Westpac's scale and will not significantly impact earnings or net profit after tax (NPAT).

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Westpac fined $26M over financial hardship failures

Written by Heidi Cuthbert Published May. 26 2026Last Updated May. 26 2026

The Federal Court has ordered Westpac (ASX:WBC) to pay a $26 million civil penalty following a lawsuit by the Australian Securities and Investments Commission over systemic failures in handling customers experiencing financial hardship.

The corporate watchdog launched legal action after discovering Westpac and its subsidiaries—including St George, BankSA, and the Bank of Melbourne—failed to respond to more than 200 online hardship notices within the legally mandated timeframe.

The compliance breakdowns spanned nearly six years, between 2017 and 2023.

Impacted customers had reached out for urgent assistance while struggling to maintain repayments on home loans, credit cards, personal loans, and car loans.

In handing down the judgement, Justice McEvoy rejected Westpac’s submission for a lesser $10 million fine, labelling that figure "little more than derisory" given the scale of the breaches.

While acknowledging the contraventions were not deliberate, stemming instead from inadequate computer systems and operational failures, Justice McEvoy determined the bank's conduct amounted to gross negligence.

Many vulnerable Australians—including individuals dealing with domestic abuse, natural disasters, serious illness, or sudden job loss—were left waiting weeks beyond the legal deadline for a response, while some never received a reply at all.

ASIC Deputy Chair Sarah Court stated that the multi-million-dollar penalty sends a definitive warning to the banking sector, emphasising that lenders must drastically improve their support mechanisms.

Court noted that Westpac ultimately failed the very customers who required breathing room during their most challenging moments.