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Westpac to refund $11m to interest only borrowers

Westpac will provide 13,000 owner-occupiers who have interest-only home loans with an interest refund, an interest rate discount, or both. The refunds amount to $11m for 9,400 of those customers.

The remediation follows an error in Westpac's systems which meant that these interest-only home loans were not automatically switched to principal and interest repayments at the end of the contracted interest-only period.

As a result, affected customers did not start paying any principal on their loans at the time agreed with the bank, and now have less time to repay the principal amount of their loans. These customers would also have paid more in interest.

To remediate the affected customers, Westpac will now:
  • Refund the additional interest paid from when the loan was contracted to convert to principal and interest repayments
  • Discount the interest rate for the remaining term of the loan.
This remediation has been designed so that customers pay no more interest over the life of the loan than they would have if the system error had not occurred.

ASIC will monitor Westpac's consumer remediation program to ensure it is meeting consumer requirements.

ASIC Acting Chair Peter Kell said banks must ensure proper systems processes and oversight, particularly when it affected important assets such as consumers' homes:

'Greater regulatory scrutiny of interest-only loans has led to improvements in how lenders are providing these loans, including in lenders identifying system errors.'

'All banks should be reviewing their systems to ensure that they minimize the chance of any such errors occurring and that any risks to customers are identified early. If past errors are identified, remediation needs to be timely, transparent and effective.'

Westpac is contacting all affected customers.

ASIC and Westpac are continuing to discuss an appropriate remediation program for investor customers with interest-only loans affected by the same system error.

This has been a long-standing error and has affected some interest-only home loans for owner-occupiers who had an interest-only loan with Westpac between 1993 and August 2016.


Read more  Australian Broker

Non-majors smash consumer satisfaction levels

Australian consumers have thrown their support behind the non-major banks with results showing lenders are still far behind when it comes to building positive customer-staff relationships.

These results come from the annual J.D. Power 2017 Australia Retail Banking Satisfaction Study which also showed a significant difference between satisfaction levels at the major and non-major banks.

The non-major bank that performed the best was Heritage Bank, which received a score of 827 out of 1,000 from consumers. This was followed by People's Choice Credit Union (822), CUA (796), Bendigo Bank (790), and Bank of Queensland (777).

Commonwealth Bank of Australia scored the highest of the majors at 747, followed by National Australia Bank (745), Westpac (738) and ANZ (732).

The average of the non-majors surveyed was 767 while the average of the majors was lower at 741.

The survey also found that while 89% of banking customers had opted for a digital channel when using their primary bank, face-to-face interaction was still preferred. In fact, 86% of those surveyed said they preferred to visit a branch or speak with someone over the phone if they had a problem while 73% said they would do the same if they had a question.

"With most customers choosing to raise a problem or question with a bank representative directly either at a branch or on the phone, closing bank branches and driving a digital agenda is not going to address this pain point," said Anthony Chiam, J.D. Power practice leader service industry.

While the branch still has a role to play, banks should also fix pain points in their online portals and banking apps especially if they want more people to transfer to these channels, he added.

"Ultimately, if banks do want to transition to digital, they need to make sure their customers are ready to follow."

The study found that 32% of customers said they had experienced a problem accessing their online bank account while 34% had difficulties accessing their mobile banking app. Banks seem to be failing in person too with 48% of customers saying they were not welcomed at the branch.

Read More  Australian Broker

Major bank unveils unsecured SME loan

National Australia Bank (NAB) has launched the $100,000 unsecured QuickBiz Loan for small business customers.

In an announcement yesterday (14 December), the lender said the new product was designed to help business owners grow without the need for security requirements such as real estate or savings.

The loan is currently only available through NAB's proprietary channel with customers applying via a digital application process. The application and decision process takes up to 10 minutes with borrowers able to upload personal and business information direct from MYOB, Nero and all other accounting software. If approved, cash will be transferred in 24 hours.

Fast easy access to cash is critical for small businesses to grow, said NAB executive general manager business direct and small business, Leigh O'Neill.

"There is often a perception that access to credit is difficult without a property or other major asset to secure against. That's why we've responded by placing more emphasis on the strength of the business rather than traditional physical bricks and mortar, and we're doing this at a fair and competitive price."

NAB developed its own in-house unsecured online lending tool, QuickBiz, which launched in June 2016 and initially offered loans up to $50,000.

The new changes will see QuickBiz extended to $100,000. This is an expansion of the bank's current unsecured financing facilities which includes an overdraft and credit card.

"Six months after a QuickBiz loan application, just under half of our customers grew their business turnover by greater than 10%. This confirms we have an important role to play by offering finance to businesses with good prospects – it's the kick-start they need."

Annualised interest rate charges for this unsecured SME loan come in at 13.85% with a 12, 24 or 36-month term.

Eligible borrowers will be sole traders, partnerships, companies or trustees with 12 months of business financial data from their accounting software.

Read More  Australian Broker







After 1 January 2016, the grant amount is $10,000 and the eligible transaction is the purchase or construction of a new home. The value of the home must not exceed $ 750,000.


Up to the 3oth of June 2017, the grant amount is $20,000 and the eligible transaction is the purchase or construction of a new home. The value of the home must not exceed $ 750,000.



After 1 January 2013, the grant amount is $10,000 and the eligible transaction is the purchase or construction of a new home. The value of the home must not exceed $ 750,000.

New Initiatives as at 1/7/17 - Abolish stamp duty for both new and existing properties under $600,000. First home buyers purchasing a property between $600,000 and $750,000 will also receive a tapered discount.

Increase in (FHOG) from $10,000 to $20,000 for new homes built in Regional Victoria and valued up to $750,000.



The grant amount is $10,000 and the eligible transaction is the purchase or construction of a new home. The value of the home must not exceed $ 750,000. However there is a $5,000 boost available until 31/12/17


A $ 15,000 FHOG applies to the purchase or construction of a new residential property that meets local planning standards anywhere in South Australia. The value of the home must not exceed $ 575,000.


After 1 January 2017, the grant amount is $ 7,000 and the eligible transaction is the purchase or construction of a new home.


After 1 January 2015, a grant of $ 26,000 will only be available to first home buyers who enter into a contract to construct or purchase a new home, or commence construction of a new home, on or after that date.


Please note this information was current from the websites above as at 17/3/17 however is subject to change at any time.  The information should only be used as a guide.  You should check the relevant First Home owners' website in your state to view current information.


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