The Commerce Commission and Financial Markets Authority (FMA) have reached a settlement agreement with Westpac New Zealand to repay over $4 million to over 100,000 past and present customers who were overcharged debit card fees when withdrawing money from Westpac ATMs in Australia.

A Commission statement says Westpac self-reported a potential breach of the Fair Trading Act in late 2014.

The potential breach relates to representations Westpac made about foreign exchange charges imposed on its customers who used debit cards to withdraw cash in Australia between October 2012 and August 2014.

Westpac told its customers that Australian ATM transactions would be processed and converted into New Zealand dollars using a rate of exchange fixed by the card schemes (ie, Visa or Mastercard).

Between October 2012 and August 2014 it charged a rate of exchange higher than that fixed by the card schemes.

Under the settlement agreement, Westpac will seek to compensate approximately 108,000 former and current customers who were overcharged more than $5. 

An additional 60,000 customers were overcharged less than $5, and the sum attributed to this group – just over $125,000 – will be donated to the Mangere Budgeting Services Trust. Any balance remaining as a result of Westpac being unable to contact and compensate former customers, including deceased customers, will also be donated to the Trust.

The Commission says it will monitor Westpac's compensation payments, but does not intend to take any further action in this case.