Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
ASIC to prolong HEM dispute with Westpac
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

ASIC to prolong HEM dispute with Westpac

asic ta  asic ta
Charbel Kadib 3 minute read

The corporate regulator will contest the Federal Court’s decision to dismiss its responsible lending case against Westpac. 

The Australian Securities and Investments Commission (ASIC) has filed an appeal with the Full Federal Court of Australia against Justice Nye Perram’s decision to dismiss its case against Westpac, which related to alleged breaches of responsible lending obligations in its issuance of home loans through the use of the Household Expenditure Measure (HEM) benchmark. 

In September 2018, Westpac admitted to breaches of responsible lending obligations when issuing home loans to customers and agreed to pay a $35-million civil penalty to resolve Federal Court proceedings under the National Credit Act.

However, the Federal Court was tentative in its approach to the matter.

Justice Nye Perram had sought a friend of the court to consider whether the Westpac case even constituted a breach of the NCCP (reportedly stating that “there is no fact before [him] that any unsuitable loans were made”).

Advertisement
Advertisement

Following his review of the case, Justice Perram judged that a lender “may do what it wants in the assessment process”, noting that other provisions of the NCCP impose penalties if lenders make unsuitable loans as a result of that process.

However, ASIC commissioner Sean Hughes said ASIC’s decision to appeal the verdict has been made to address “uncertainty” caused by Justice Perram’s decision.  

“The Credit Act imposes a number of legal obligations on credit providers, including the need to make reasonable inquiries about a borrower’s financial circumstances, verifying information obtained from borrowers, and making an assessment of whether a loan is unsuitable for the borrower,” he said.

“ASIC considers that the Federal Court’s decision creates uncertainty as to what is required for a lender to comply with its assessment obligation, nor does ASIC regard the decision as consistent with the legislative intention of the responsible lending regime."

He concluded: “For those reasons, ASIC will appeal to the Full Court of the Federal Court.”

In response to ASIC's announcement, Westpac has stated: "Westpac acknowledges that today ASIC has filed an appeal with the Full Federal Court in relation to proceedings against Westpac regarding its responsible lending obligations."

[Related: ASIC takes banks to court over ‘unfair’ loan terms]

ASIC to prolong HEM dispute with Westpac
asic ta
TheAdviser logo
asic ta
Charbel Kadib

Charbel Kadib

Charbel Kadib is a journalist on The Adviser and Mortgage Business.

Before joining Momentum Media in 2017, Charbel held roles with public relations agency Fifty Acres, and the Department of Communications and the Arts. 

Email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

FROM THE WEB
more from the adviser
peppermoney ta Pepper launches mortgage offering in NZ

Non-bank lender Pepper Money has launched mortgage lending operat...

arrow down business man ta Fewer mortgage brokers writing commercial loans

Contrary to industry expectations, the MFAA has reported a declin...

Eclipx Commercial ta SME lender buys Eclipx Commercial

SME lender Grow Asset Finance has purchased Eclipx Commercial for...