Westpac softens policy on bankruptcy

By earthnews
10 months Ago

Navigation for News Categories

Westpac is going to relax its policy on access to banking services for people declared bankrupt.
Photo: AFP

Westpac is going to relax its policy on access to banking services for people declared bankrupt.

A 2022 survey undertaken by the Insolvency and Trustee Service found 49 percent of respondents faced bank account closures after being declared bankrupt, while 22 percent had difficulty finding a new bank or credit union.

Westpac is changing its policy so that customers made bankrupt will be able to continue to operate transactional accounts, open new transactional or savings accounts and retain or apply for a debit card.

It said evidence showed many declared bankrupt had their bank accounts closed and struggled to get access to even the most basic banking services.

Manager of customer vulnerability and financial inclusion Louisa Brock said the bank wanted to exit the debt, not the customer.

“We acknowledge that there will be a range of views around people who have been declared bankrupt,” Brock said.

“But in most cases it’s people who have fallen on hard times. We believe bankruptcy should not be a long-term barrier to inclusion.”

Prior to the policy change, Westpac customers who had been declared bankrupt could have their accounts closed, while it could also be difficult for bankrupt customers who did not previously bank with Westpac to open new accounts.

“Our teams can now proactively let bankrupt customers know that we’re not going to close their transactional accounts or take their debit cards away,” Brock said.

Soon-to-be-released prisoners will also get access to new accounts with the bank.

And according to Westpac, financial mentors working in the community to improve welfare and wellbeing have seen positive benefits to the bankruptcy policy changes.

Without a bank account, people can find it difficult to access payments and benefits, or do things like pay rent.

“We want to remove some of that stress and potential embarrassment by ensuring people who are experiencing financial difficulties can keep their day-to-day account and debit card. It’s important that everyone is able to access the basic banking services they need to live their lives,” Brock said.