Westpac admits lending breaches, settles for $25 million penalty

Bloomberg

Westpac Banking Corp. agreed to pay a A$35 million ($25 million) civil penalty after admitting it breached responsible-lending laws by failing to properly assess whether some customers could afford to repay their mortgages.
In a settlement ahead of court, the regulator said in a statement that Westpac’s automated loan approval system had failed to use customers’ actual living expenses when assessing affordability and instead relied on a lower benchmark. The system also failed to take into account how an interest-only period would affect repayments for the life of the loan.
“This outcome is a warning to all lenders that they must comply with the responsible lending obligations,” Australian Securities & Investments Commission Chairman James Shipton said. “If they do not, ASIC will take action to enforce the law.”
The case related to 100,000 loans made between December 2011 and March 2015. Of these, approximately 10,500 should not have been automatically approved, ASIC said.