ASIC has indicated it will not appeal to the High Court on the infamous “red wine and Wagyu steak” responsible lending case against Westpac, after it was shot down by the Federal Court.
ASIC had taken the big four bank to court over allegations it breached lending laws between 2011 and 2015 by using the household expenditure measure (HEM) to estimate potential borrowers’ living expenses.
The benchmark was frugal, the regulator said, arguing that by using HEM Westpac had approved loans when customers’ actual expenses were higher than the benchmark.
Despite Westpac admitting to breaching responsible lending obligations in its home loans and agreeing to pay a $35 million civil penalty, the Federal Court dismissed the case in August last year, finding the law did not operate as ASIC believed.
In June, the court handed down its majority decision two to one dismissing the regulator’s appeal against the decision.
ASIC has now stated it could have sought special leave to appeal to the High Court to obtain a ruling on the construction of the statute, but it was “mindful” of the impact of the additional time needed to resolve the matter in the current economic circumstances.
It is set to review its updated regulator guidance on responsible lending conduct, considering the implications of the Federal Court decision.
Further, ASIC said ultimately any reform of the National Consumer Credit Protection Act (National Credit Act) to clarify further the enforcement of those principles is ultimately a matter for the federal government and Parliament.
“Bearing in mind the economic circumstances, it is important to remember that under the National Credit Act, ‘responsible lending’ obligations do not apply, and never have applied, to loans made for business purposes,” ASIC stated.
Meanwhile the bank has faced other troubles. Westpac recently completed an internal reassessment after its anti-money laundering scandal, which found its non-financial risk culture was “immature and reactive”.
Chief executive Peter King pledged to ramp up the bank’s changes to its risk management culture, launching a multiyear program.
On Wednesday, Maurice Blackburn launched a class action against the bank over its commissions to auto dealers which allegedly incentivised higher rates on car loans.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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