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Westpac NZ has updated its bankruptcy policy to improve access to basic banking services for Kiwis going through tough times.
The Westpac NZ Access to Banking in Aotearoa Report, released last year, found New Zealanders who had been made bankrupt often had their bank accounts closed and subsequently struggled to open a new account.
The report found being unable to access a bank account had a high impact on a variety of marginalised groups. One of the recommendations was for greater flexibility and case-by-case consideration for customers who are bankrupt.
Westpac’s Manager Customer Vulnerability and Financial Inclusion, Louisa Brock, says Westpac was already working on changes to its bankruptcy policy to reduce the number of people being excluded from the banking system, but the report made it clear there was a real need.
“We know bankruptcy is incredibly stressful and not having a bank account can have serious impacts on people’s lives,” Ms Brock says.
“Without a bank account, it can be difficult to access payments and benefits, or do things like pay your 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.”
A 2022 survey undertaken by the Insolvency and Trustee Service found 49% of respondents faced bank account closures after being declared bankrupt, while 22% had difficulty finding a new bank or credit union.
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 didn’t previously bank with Westpac to open new accounts with the bank.
Westpac’s policies have now been updated so that customers who are in bankruptcy are able to continue to operate transactional accounts, open new transactional or savings accounts and retain or apply for a debit card.
“It might seem a relatively small change, but it’s a change that can have a hugely meaningful impact on someone who’s going through the tough time of a bankruptcy, allowing them to get on with many of the everyday money activities we take for granted,” Ms Brock says.
“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.
“We’ve had positive feedback about this from both customers and financial mentors – people really appreciate that we’re standing by impacted customers.
“We’re really clear that we want to exit the debt, not the customer.”
ENDS
About the bankruptcy process
Bankruptcy is a legal process for people who are unable to repay their debts – you can become bankrupt if you owe more than $1,000, but it’s usually recommended for people who owe more than $50,000. Bankruptcy usually lasts for three years and applies to all debts (although secured debts such as a mortgage may be exempt).