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Wednesday 1 March 2017

17-048MR ASIC commences civil penalty proceedings against Westpac for breaching home-loan responsible lending laws

ASIC has today commenced civil penalty proceedings in the Federal Court against Westpac Banking Corporation (Westpac) for a number of contraventions of the responsible lending provisions of National Consumer Credit Protection Act 2009 (Cth) (the National Credit Act).

ASIC alleges that in the period between December 2011 and March 2015 Westpac failed to properly assess whether borrowers could meet their repayment obligations before entering into home loan contracts.

Specifically, ASIC alleges that Westpac:

  • used a benchmark instead of the actual expenses declared by borrowers in assessing their ability to repay the loan
  • approved loans where a proper assessment of a borrower's ability to repay the loan would have shown a monthly deficit
  • for home loans with an interest-only period, Westpac failed to have regard to the higher repayments at the end of the interest-only period when assessing the borrowers' ability to repay.

The National Credit Act provides consumer protections to ensure that credit providers make reasonable inquiries about a borrower's financial situation and assess whether a loan contract will be unsuitable for the borrowers.

The first hearing for the proceedings will be on 21 March 2017 at 9.30am in the Federal Court in Sydney.

ASIC will be making no further comment at this time.

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Background

The proceedings follow ASIC's review of interest-only home loans (REP 445) in which ASIC reviewed the responsible lending practices of 11 lenders (refer: 15-220MR).

Editor's note 1:

At a case management hearing on 21 March 2017, the matter was set down for a further case management hearing on 19 May 2017.

Editor's note 2:

On 17 May 2017, the case management hearing was rescheduled for 8 June 2017.

Editor's note 3:

On 7 June 2017, the case management hearing of 8 June 2017 was vacated.  A further case management hearing was scheduled for 26 September 2017.

Editor's note 4:

On 25 September 2017, the case management hearing of 26 September was vacated. A further case management hearing was scheduled for 5 December 2017.

Editor's note 5:

On 5 December 2017, the court set the matter down for a further case management hearing on 1 March 2018.

Editor's note 6:

On 30 January 2018, the further case management hearing was moved to 6 March 2018.

Editor's note 7:

On 6 March 2018, the matter was set down for a three-week hearing, commencing 3 September 2018.

Editor's note 8:

Prior to the commencement of the trial, Westpac admitted breaching its responsible lending obligations when providing home loans and agreed to submit to a $35 million civil penalty to resolve Federal Court proceedings under the National Consumer Credit Protection Act 2009 (Cth) (the National Credit Act). Refer 18-255MR for more information.

Editor's note 9:

On 13 November 2018 the Court dismissed the parties’ joint application for approval of the agreed resolution. The matter will return to Court for a case management hearing on 27 November 2018 at 9:30am.

Last updated: 13/11/2018 12:26