ASIC has commenced civil penalty proceedings in the Federal Court against a big four bank for a number of contraventions of the responsible lending provisions of the National Consumer Credit Protection Act 2009.
ASIC alleges that in 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.
Specifically, ASIC alleges 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
• 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.
The National Credit Act provides consumer protections to ensure that credit providers make reasonable inquiries about a borrower's financial situation and assess whether a loan contract will be unsuitable for the borrowers.
The first hearing for the proceedings will be on 21 March 2017 at 9.30am in the Federal Court in Sydney.
ASIC said that it will be making no further comment at this time.
The proceedings follow ASIC's review of interest-only home loans in which the regulator reviewed the responsible lending practices of 11 lenders.
[Related: Major bank delivers broker commission update]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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