Westpac admits fault, agrees to $35 mil penalty
Westpac has admitted breaching its responsible lending obligations when providing home loans under the National Consumer Credit Protection Act, and agreed to a $35 million civil penalty to resolve Federal Court.
Westpac will also pay the Australian Securities and Investments Commission’s (ASIC’s) litigation and investment costs and, if approved by the Federal Court, this will represent the largest civil penalty awarded under the National Credit Act.
Westpac was accused of contravening the Act in its home loan assessment process from December 2011 to March 2015 by:
- Not having regard to consumers’ declared living expenses when assessing their capacity to repay home loans, and instead used a benchmark; and
- Failed to use the higher repayments at the end of the interest-only period when assessing a consumer’s capacity to repay the loan for home loans to owner occupiers with an interest-only period.
ASIC chair, James Shipton, said this was a positive outcome and it sent a strong regulatory message to the industry that non=compliance with responsible lending obligations would not be tolerated.
“Responsible lending in the home lending market is absolutely vital to consumers, banks and our economy,” he said. “This outcome is a warning to all lenders that they must comply with the responsible lending obligations. If they do not, ASIC will take action to enforce the law.”
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