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Court finds no breach of responsible lending by big 4 bank

Westpac

One of Australia’s largest banks has been found not to have breached responsible lending obligations in its provision of home loans to customers, despite ASIC allegations.

The Federal Court of Australia’s Justice Nye Perram has dismissed the Australian Securities and Investment Commission’s (ASIC) action against Westpac, after the two parties had jointly approached the Federal Court to seek orders that the bank had contravened relevant responsible lending provisions.

It comes after Westpac admitted to breaches of responsible lending obligations in September 2018 and subsequently agreed to pay a $35 million civil penalty to resolve the Federal Court proceedings. 

In making his decision, Justice Perram consulted with a friend of the court to consider whether the case even constituted a breach of national credit provisions, stating that there were no facts before him to demonstrate that any unsuitable loans were approved.

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ASIC had alleged Westpac breached responsible lending laws in the assessment of 260,000 approved home loans between December 2011 and March 2015 using an automated decision system.

For a further 50,000 home loans, ASIC had alleged that Westpac had received, but not used, consumers’ actual expense information than the Household Expenditure Measure.

The regulator also argued that Westpac had used an incorrect method to assess consumer capacities to repay home loans at the end of the interest-only period.

As a result of the approval process in use by Westpac, ASIC had contended that the bank should not have automatically approved around 10,500 of the loans.

According to Nest Egg’s sister site, Mortgage Business, the civil penalty, if approved, would have been the largest civil penalty ever awarded under the National Credit Act.

Court finds no breach of responsible lending by big 4 bank
Westpac
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Grace Ormsby

Grace Ormsby

Grace Ormsby is a journalist for Momentum Media's Nest Egg. 

Before moving into the finance realm, Grace worked on Nest Egg's sister site Lawyers Weekly, and was previously a staff reporter at the NSW Business Chamber. 

She holds a Bachelor of Communication (Journalism), a Bachelor of Laws (Hons) and a Diploma of Legal Practice from the University of Newcastle.

Grace can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. 

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