The Australian Securities and Investments Commission (ASIC) has sought to defend its position as pursuit of a ‘test case’ following its Federal Court loss to Westpac over responsible lending provisions.
The Federal Court yesterday found against ASIC with respect to its claims that the banking group had breached the responsible lending provisions of the National Consumer Credit Protection Act.
However, ASIC commissioner, Sean Hughes claimed the regulator had actually pursued the action in the interests of judicial clarity.
“ASIC took on the case against Westpac because of the need for judicial clarification of a cornerstone legal obligation on lenders, this is why ASIC refers to this case as a ‘test case’,” he said.
“As a regulator, it is our role to test the law and its ambit. The obligation to assess loan applications builds on the requirement for banks to make inquiries about a borrower’s financial circumstances and capacity to service a loan and to verify the information that borrowers give banks.”
Hughes said the regulator was reviewing the judgement carefully.
The Federal Court loss comes in the wake of ASIC espousing an “if not, why not” approach to litigation in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Acknowledging the Federal Court judgement, Westpac Consumer Division chief executive, David Lindberg said it had been an important test for the industry.
“We welcome the clarity that today’s decision provides for the interpretation of responsible lending obligations,” it said.