Westpac has agreed to pay a $35 million civil penalty for breaching responsible lending laws.
The Australian Securities and Investments Commission took action against the bank after allegations it approved more than 10,000 loans for people who could not afford them.
The action related to Westpac’s home loan assessment process between December 2011 and March 2015 with the bank using incorrect information about customers’ expenses when deciding on whether loans should be approved.
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Around 260,000 loans were approved by Westpac during that time with ASIC saying 10,500 should not have been.
The penalty needs to be given the green light by the Federal Court but will be the largest civil penalty awarded under the National Credit Act.
Westpac changed its lending practices in 2015 to ensure customers’ expenses are now assessed against a higher benchmark.