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ASIC seeks record penalty for Westpac’s home loan breach

Media Releases

Date : 04 September 2018

Author: The Hon. Josh Frydenberg MP

THE HON JOSH FRYDENBERG MP
Treasurer

MEDIA RELEASE

4 September 2018

ASIC SEEKS RECORD PENALTY FOR WESTPAC’S HOME LOAN BREACH

The Australian Securities and Investments Commission (ASIC) has asked the Federal Court to impose a $35 million civil penalty on Westpac Banking Corporation for breaching its responsible lending obligations when providing home loans. If approved by the court, this will be the largest ever civil penalty under the National Consumer Credit Protection Act 2009 (National Credit Act) and nearly double the previous record penalty for a National Credit Act breach.

ASIC announced the outcome today, with Westpac admitting breaching the National Credit Act. In doing so, ASIC has successfully held Westpac to account for failing to properly assess whether borrowers could meet their repayment obligations before entering into home loan contracts.

In March 2017, ASIC announced it was commencing civil proceedings in the Federal Court against Westpac for breaching its responsible lending obligations when providing home loans, including:

Approximately 260,000 home loans were approved by Westpac’s automated decision system during the December 2011 to March 2015 period which was the focus of ASIC’s allegations.

This kind of conduct is completely unacceptable and why we have laws in place to protect consumers from being put at risk of being in unaffordable home loans.

The Coalition Government has undertaken significant reforms to ensure that ASIC has the resources and powers it needs to combat misconduct in the financial services industry and across all corporations for the protection of Australian consumers. This includes:

These reforms support ASIC’s new Chair James Shipton’s approach to refocus ASIC’s strategic direction on proactive enforcement and increase onsite supervisory approaches.

The Morrison Government will continue to ensure ASIC is equipped with the resources and powers it needs to effectively detect, deter and punish those who do the wrong thing, to improve community confidence and outcomes for consumers and investors in the financial services and corporate sectors.

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