The major bank has joined NAB in updating its lending policy in line with revisions to the banking code.
Westpac Group has updated its home lending policy to reflect new standards enshrine under the Banking Code of Practice, effective from 1 July.
The new code includes greater obligations for ethical, fair and responsible practices to individual and small business customers and their guarantors.
As part of Westpac’s compliance with the new guidelines, the following changes have been introduced:
- New obligations to “vulnerable customers”
- Additional disclosures and requirements for signing and accepting guarantor applications
- Changes to the way loans to co-borrowers are assessed
- Improving accessibility for indigenous customers
- Enhancing the fixed rate expiry process
New obligations to ‘vulnerable customers’
Westpac will require brokers to take steps to ensuring that vulnerable customers (e.g. clients with age-related or cognitive impairments, or victims of elder abuse, domestic violence or financial abuse) receive appropriate care throughout the loan application process.
Brokers are encouraged to:
- Familiarise themselves with the circumstances in which a customer may be vulnerable and require additional support.
- Contact Westpac if they’re informed of a client in a vulnerable situation, which may require assistance.
Westpac has also introduced additional disclosures and requirements for signing and accepting a guarantee application.
Brokers will no longer be involved in the guarantor document signing process, with all guarantor information to be express posted directly to the guarantor from the bank in the form of the Guarantor’s Disclosure Pack.
If independent legal advice is not sought by the guarantor, they must take a minimum of three days to consider all the information provided before signing the guarantee.
Loans to co-borrowers
Westpac has also revealed that it will only approve loans to co-borrowers where “substantial benefit” is demonstrated from information provided.
Substantial benefit will now be defined as having at least 30 per cent title in security.
Improving accessibility for Indigenous customers
Brokers will be required to supply Indigenous customers who do not possess identification with an Indigenous Communities Verification (RICV) form.
The new requirement is part of Westpac’s commitment to improving accessibility to banking services for Indigenous customers.
Enhancing the fixed rate expiry process
Effective from 24 June 2019, home Loan customers who have a maturing fixed rate loan and have received a Fixed Rate Expiry (FREPS) letter to refix will now be able to choose to digitally accept an offer to refix.
The option to refix through internet banking will be made available seven days after the physical letter is mailed.
Westpac is the latest lender to update its lending policy in line with new provisions under the banking code, following similar changes from NAB.
The Australian Securities and Investments Commission approved the Australian Banking Association’s new code in August 2018, following a prolonged dispute over certain terms within the code, which came to light during the third round of hearings of the banking royal commission.