The Westpac Banking Corp (ASX: WBC) share price will be on watch on Friday after confirming that it has been hit with another class action.
What has Westpac announced?
This morning Westpac confirmed that it has been named in a class action brought by law firm Maurice Blackburn in relation to allowing automotive dealerships to charge customers flex commissions on car finance.
Flex commissions allowed automotive dealerships to set the interest rate on car loans above a base rate set by the bank and take a cut of the difference.
The practice was banned by ASIC in 2018 on the belief that they could encourage car dealers and finance brokers to arrange car loans at the highest possible interest rate. The regulator noted that the higher the interest rate, the larger the commission earned by the dealer or broker.
Who is impacted?
This class action has been filed by Maurice Blackburn on behalf of certain plaintiffs and group members in relation to the payment of flex commissions to auto dealers pursuant to automobile finance agreements signed during the period 1 March 2013 to 31 October 2018 inclusive.
According to the AFR, Maurice Blackburn's national head of class actions, Andrew Watson, believes there could be as many as 400,000 unsuspecting car buyers that have been negatively impacted by the practice.
He said: "This case will seek to prove that Westpac and St George failed to comply with their obligations under consumer credit protection laws and that this failure caused substantial losses for many consumers."
At this stage it is unclear what the financial damage of a successful claim would be. At present, the claim seeks to recover "damages of an unspecified amount."
Westpac has advised that it intends to defend the claim and notes that other similar claims may be filed by other law firms.
