ASIC starts penalty proceeding against Westpac

ASIC/westpac/federal-court/

1 March 2017
| By Oksana Patron |
image
image image
expand image

The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings against Westpac in the Federal Court for breaching the provisions of the National Consumer Credit Protection Act 2009.

According to ASIC’s investigation, Westpac failed to “properly assess whether borrowers could meet their repayment obligations before entering into home loan contracts” in the period between December 2011 and March 2015.

The regulator also said that the proceedings followed its review of interest-only home loans in which ASIC had reviewed the responsible lending practices of 11 lenders.

In particular, ASIC alleged 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; and
  • 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.

Under the National Credit Act, credit providers were obliged to make reasonable inquiries about a borrower’s financial situation and assess whether a loan contract would be unsuitable for the borrowers. 

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

4 months 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

5 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

7 months ago

Commonwealth Bank has formally dropped to zero advisers following LGT Crestone’s acquisition of its advice arm – some six years on from the Hayne royal commission. ...

3 weeks 5 days ago

The FSCP has issued a written direction to an adviser who charged clients “extraordinary fees” for inappropriate and conflicted advice, as well as encouraged them to swit...

1 week 1 day ago

ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager. ...

2 weeks 4 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
3