The corporate regulator said it has been investigating up to 11 banks over their home lending practices, amid concerns loans are being given to people that cannot afford to repay them.
Appearing before Senate Estimates, the Australian Security and Investments Commission (ASIC) was questioned about its Federal Court action against Westpac, announced yesterday.
ASIC’s senior executive responsible for banking, Michael Saadat, said the inquiries have been underway for a couple of years.
“It started really when we conducted our review of interest only loans in 2015,” he said.
“We looked at the conduct of 11 lenders.
“We have announced action against Westpac but we have been in discussions with other lenders and we hope to make an announcement about the work that we’ve been doing with other lenders in the next few weeks.”
Mr Saadat added that Westpac had changed its lending practices after the regulator made its concerns known in 2015.
“Despite the fact that they stopped the practice … we’ve decided to bring this action because of the importance of the issues that it raises,” he said.
In a statement yesterday, Westpac said the loans identified by ASIC are all meeting or ahead on repayments.
However, ASIC said its action is intended to head-off possible future risks for consumers and the financial system.
“One of the aims of the responsible lending legislation is to enable ASIC to take action before the problems manifest themselves,” explained the regulator’s deputy chairman Peter Kell.
ASIC’s chairman Greg Medcraft said a key motivation for the regulator was to get other banks to change their ways.
“The issues is deterrence, and when you lodge a case it’s not just for that party, it’s to send a message to the broader sector,” he said. source