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Friday 26 June 2020

20-149MR ASIC’s responsible lending appeal dismissed by the Full Federal Court

On 10 September 2019, ASIC filed an appeal with the Federal Court of Australia against the decision of the Honourable Justice Perram regarding ASIC’s allegations against Westpac Banking Corporation (Westpac) for contraventions of responsible lending provisions of the National Consumer Credit Protection Act 2009 (Cth) (Credit Act). The matter was heard in February 2020 and today the Full Federal Court handed down its majority decision two to one dismissing ASIC’s application.

ASIC took on the case against Westpac because we felt it was important for judicial clarification of a cornerstone legal obligation on lenders. 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 and capacity to service a loan. Credit providers must also verify the information obtained from borrowers and make an assessment of whether a loan is not unsuitable for the borrower.

On 1 March 2017, ASIC commenced Federal Court proceedings alleging that, during 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 (17‑048MR).

On 13 August 2019, the Federal Court found Westpac had not breached the responsible lending provisions of the Credit Act, as Perram J decided that a lender ‘may do what it wants in the assessment process’ (19‑210MR).

‘ASIC notes today’s majority judgment and will review each of the separate decisions carefully – including what additional measures or clarification may be required to support compliance with the Credit Act,’ said ASIC Commissioner Sean Hughes.


In 2019, ASIC undertook a consultation process to update its responsible lending guidance (19‑342MR). As is ASIC’s usual practice, we will carefully consider the Court’s determination and any revisions that are necessary to our guidance.