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- Westpac wins landmark case against the corporate regulator, ASIC, as no wrongdoing was found by the Federal Court
- ASIC alleged the banking giant breached the National Credit Act, in regard to irresponsible, automated home loan lending
- Westpac’s share price is up 0.35 per cent today, currently sitting at $28.51 per share
Westpac has won a Federal Court case which accused the banking giant of malpractice, driven by the Australian Securities and Investments Commission (ASIC).
The corporate watchdog insisted Westpac had breached responsible lending regulations on nearly 262,000 home loan approvals between December 2011 and March 2015.
In 2017, ASIC first laid charges against the bank on the grounds it used a benchmark rather than customers actual expenses in determining their ability to pay back a loan.
Additionally, ASIC alleged Westpac approved loans without adequately determining customers ability to pay them back, and neglected the impact higher interest payments would have on customers.
The claims were made under the National Credit Act, which is designed to protect banking customers against receiving loans they can’t afford to re-pay.
In 2018, Westpac chose to settle with ASIC for $35 million, admitting the company had violated the National Credit Act. However, this was subject to court approval.
In November last year, Justice Nye Perram denied Westpac’s decision to settle, proposing there was a lack of clarity surrounding whether the bank actually had contravened sections 128 and 129 of the National Credit Act.
Westpac had been using the Household Expenditure Measure to calculate and approve home loans during this period, however, both sides were unable to determine when this practice turned into a breach of regulation.
In the dismissed settlement, Westpac admitted during the reviewed period over 250,000 home loans were approved via an automated process. Of these, 10,500 should have been passed on to a credit officer for further assessment.
In today’s ruling Justine Perram denied Westpac’s wrongdoing and has ordered ASIC to pay the banks legal fees.
Westpac’s share price is up 0.35 per cent today, currently sitting at $28.51 per share.
