ASIC appeals Westpac responsible home loan case

ASIC appeals Westpac responsible home loan case

When the Federal Court last month ruled in Westpac's (ASX: WBC) favour in a case brought by the Australian Securities and Investments Commission (ASIC), the bank said the decision brought clarity to how responsible lending obligations could be interpreted.

ASIC had alleged Westpac breached the law in using an automated process based on the Household Expenditure Measure (HEM) to make up to 262,000 home loans, but Justice Nye Perram saw no issue, dismissed proceedings and ordered ASIC to pay the costs.

"Westpac has always sought to lend responsibly to customers and takes its lending obligations very seriously," Westpac's consumer division chief executive David Linberg said at the time.

"This is an important test case for the industry, and we welcome the clarity that today's decision provides for the interpretation of responsible lending obligations."

But now the corporate watchdog is appealing the decision, claiming it brings uncertainty to how lending rules are applied.

"The Credit Act imposes a number of legal obligations on credit providers, including the need to make reasonable inquiries about a borrower's financial circumstances, verifying information obtained from borrowers and making an assessment of whether a loan is unsuitable for the borrower," says ASIC Commissioner Sean Hughes.

"ASIC considers that the Federal Court's decision creates uncertainty as to what is required for a lender to comply with its assessment obligation, nor does ASIC regard the decision as consistent with the legislative intention of the responsible lending regime.

"For those reasons, ASIC will appeal to the Full Court of the Federal Court."

The case related to loans made between December 2011 and March 2015, and alleged Westpac failed to properly assess whether borrowers could meet their repayment obligations before entering into home loan contracts.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

New report reveals 68 per cent of businesses are vulnerable to a cybersecurity attack

Partner Content
36 per cent of employees fear their organisation is at risk of financial losse...
SAI Global
Advertisement

Related Stories

Singapore to open doors to vaccinated Aussies next month

Singapore to open doors to vaccinated Aussies next month

Vaccinated travellers from Australia will be able to enter Singapor...

Beach Energy faces class action after shares hit an oil slick this year

Beach Energy faces class action after shares hit an oil slick this year

A pullback in flows from a South Australian oilfield could provide ...

If all 2030 climate targets are met, the planet will heat by 2.7 degrees this century. That’s not OK

If all 2030 climate targets are met, the planet will heat by 2.7 degrees this century. That’s not OK

If nations make good on their latest promises to reduce emissions b...

Corporate Australia taps into social conscience with a sharp rise in ESG reporting

Corporate Australia taps into social conscience with a sharp rise in ESG reporting

Corporate Australia is gaining a social and environmental conscienc...