On 10 September 2019, ob体育 filed an appeal with the Federal Court of Australia against the decision of the Honourable Justice Perram regarding ob体育鈥檚 allegations against Westpac Banking Corporation (Westpac) for contraventions of responsible lending provisions of the National Consumer Credit Protection Act 2009 (Cth) (Credit Act). The matter was heard in February 2020 and today the Full Federal Court handed down its majority decision two to one dismissing ob体育鈥檚 application.
ob体育 took on the case against Westpac because we felt it was important for judicial clarification of a cornerstone legal obligation on lenders.聽The Credit Act imposes a number of legal obligations on credit providers, including the need to make reasonable inquiries about a borrower鈥檚 financial circumstances and capacity to service a loan. Credit providers must also verify the information obtained from borrowers and make an assessment of whether a loan is not unsuitable for the borrower.
On 1 March 2017, ob体育 commenced Federal Court proceedings alleging that, during the period between December 2011 and March 2015, Westpac failed to properly assess whether borrowers could meet their repayment obligations before entering into home loan contracts (17鈥�048惭搁).
On 13 August 2019, the Federal Court found Westpac had not breached the responsible lending provisions of the Credit Act, as Perram J decided that a lender 鈥榤ay do what it wants in the assessment process鈥� (19鈥�210惭搁).
鈥榦b体育 notes today鈥檚 majority judgment and will review each of the separate decisions carefully 鈥� including what additional measures or clarification may be required to support compliance with the Credit Act,鈥� said ob体育 Commissioner Sean Hughes.
Background
In 2019, ob体育 undertook a consultation process to update its responsible lending guidance (19鈥�342惭搁). As is ob体育鈥檚 usual practice, we will carefully consider the Court鈥檚 determination and any revisions that are necessary to our guidance.