Australia's Westpac sued for making loans customers could not repay
* Class-action lawsuit focused on irresponsible lending
* Follows bank settling similar case with corporate
(Adds Westpac response, picture)
SYDNEY, Feb 21 (Reuters) - Australia's Westpac Banking Corp
was sued on Thursday by customers who said the bank had
lent them money they could not afford to repay, the second such
case the firm has faced in the past year.
The case comes with Australia's financial services sector
under great pressure to reform after a public inquiry uncovered
widespread misconduct, including charging customers fees for no
service, irresponsible lending and deception of regulators.
Westpac had already agreed to pay a A$35 million ($25
million) fine for wrongly approving thousands of mortgages in a
similar case filed by Australia's corporate regulator last year.
Under Australian law, banks must check that loans are
suitable for borrowers.
"This case will seek to prove that Westpac failed to comply
with these obligations and that this failure caused substantial
losses for many consumers," said Ben Slade, a lawyer at Maurice
Blackburn, the firm that filed the class-action lawsuit.
Funding for the case will come from Britain-based Harbour
Litigation Funding and covers borrowers who took loans from the
bank after 2011.
Westpac, the country's oldest bank and the largest by
assets, said it takes its responsible lending obligations very
seriously and will be defending the case.
A powerful inquiry into Australia's finance sector
excoriated the nation's lenders and said that poor treatment of
customers was driven by greed, although it has not recommended
major structural changes to the industry.
In its case against the regulator, Westpac accepted that it
had breached consumer lending law when its automated loan
approval system failed to consider borrowers' living expenses
when deciding if they could repay a home loan.
Of 260,000 loans approved over a three-and-a-half-year
period from 2011 to 2015, Westpac ignored living expenses for
50,000 and miscalculated another 50,000 borrowers' ability to
repay their debts.
($1 = 1.3961 Australian dollars)
(Reporting by Tom Westbrook in Sydney; Editing by Matthew Lewis
and Stephen Coates)
First Published: 2019-02-21 00:00:54
Updated 2019-02-21 07:43:47
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