Westpac could face big loan suits
Lawyers say Westpac could be sued for billions of dollars over irresponsible home loans.
Westpac recently reached a $35 million settlement with ASIC over an “automated decision-making system” for home loans, which issued more than 10,000 mortgages that should not have been approved.
“These admissions expose Westpac to civil action by individuals who were provided with too much credit — and inappropriately so — during their application for a loan,” says Josh Mennen, a principal at the plaintiff law firm Maurice Blackburn.
“In circumstances where people find themselves in default on their mortgages they will be able to bring an action against Westpac, potentially, for breaches of responsible lending laws.
“It is early days in relation to any class action, but I don't think anyone who has been following this could seriously rule out the possibility of a class action being brought,” he told ABC reporters.
Experts also warn that international investors in the wholesale money markets who gave Westpac money could also have a case to sue, if default rates rise in the future.
An investigation by the Australian Prudential Regulation Authority (APRA) found 8 out of 10 of its core lending controls were “ineffective in their operation”, meaning Westpac lacked effective measures to accurately assess the existing debts and expenses of home loan customers or their ability to service loans.
“There were limited controls in place to ensure that borrower declared living expenses were complete and accurate,” auditors concluded.