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ASIC appeals Westpac’s ‘responsible lending’ win
The corporate regulator has announced that it has filed an appeal against the recent Federal Court ruling that Westpac had not breached responsible lending provisions in its granting of home loans between 2011 and 2015.
ASIC appeals Westpac’s ‘responsible lending’ win
The corporate regulator has announced that it has filed an appeal against the recent Federal Court ruling that Westpac had not breached responsible lending provisions in its granting of home loans between 2011 and 2015.
At the time, Westpac was found not to be in breach of its obligations by Justice Nye Perram, who said “the act requires a credit provider to ask itself only whether ‘the consumer will be unable to comply with the consumer’s financial obligations under the contract’ or, alternatively, whether the consumer ‘could only comply with substantial hardship’.”
The decision was considered as a test case for the legislation surrounding obligations on credit providers and what actually constitutes the provision of ‘responsible’ lending.
The decision had followed a concession by Westpac that it had granted 100,000 loans “without sufficiently assessing their suitability”.
In announcing the appeal, ASIC commissioner Sean Hughes said that “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”.
“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,” he continued.
“For those reasons, ASIC will appeal to the Full Court of the Federal Court,” the commissioner stated.
The ASIC announcement comes less than a week after law firm Slater and Gordon announced it was filing a class action against Westpac subsidiaries BT Funds Management Ltd and Westpac Life Insurance Services Ltd, which alleged that thousands of superannuation members were shortchanged by their funds and not provided with “valuable” service.
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