Banking ombudsman, Deborah Battell, is considering a review of regulations on unsolicited cards in response to the growing number of complaints and protests she's receiving concerning Westpac's new promotion.
Westpac was able to cleverly sidestep the otherwise tight and stringent rules on unsolicited credit cards. The company is offering preferred customers a second credit card, which ironically they have to opt out of than in.
Last month, the company offered its Visa cardholders a companion American Express card, and gave select customers a few weeks to cancel. Many people who was not used to this kind of promotional gimmick, were not able to opt out of the new card in time and soon afterwards found themselves getting credit cards in the mail. Many were not happy.
Westpac, however, defended their actions by stating that companion cards did not charge additional fees and credit limit of customers would remain the same. Those selected customers would not be billed separately for a companion card and will receive just one bill. What's good, they added, is that customers could even earn reward points for using the Amex card.
The banking ombudsman admitted that Westpac remained within legal boundaries with their recent actions, but was wary about the company's intentions.
Next year, regulatory committees would meet to review banking practice regulations and she assured consumers that she will bring the issue up during sessions with concerned agencies to determine if existing banking rules need to be revised or modified.
Budget experts, however, believe that the practice is deceptive and ill-timed especially in the backdrop of economic recession, with a lot of families getting deeper and deeper into debt. In these challenging times, an extra card would do more harm than good.
One expert added that many people today are on survival mode and living by the day, and an additional burden like a new credit card will just complicate matters and that they are better off without one.
Another analyst countered that this strategy overall is good for Westpac's business which if successful could help the company push revenues up and improve margins. He added that the company is looking to expand their market without necessarily opening up new market segments and that Westpac is doing this by offering preferred customers products that promise to enhance purchasing experience.
For the new card to be activated, customers need to make a phone call to Westpac's customer service hotline. For customers who did not want the card in the first place, but received a credit card nevertheless, all they need to do is to physically dispose of the card.