Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter

Major bank reacts to ASIC lending concerns

In response to ASIC's concerns, a big four bank has suspended sending credit limit increase invitations to its customers and implemented a number of changes to improve its lending practices.

In a statement this week, ASIC said Westpac had committed to a remediation program that includes proactive customer refunds, and a contribution of $1 million over four years to support financial counselling and literacy.

ASIC was concerned that Westpac failed to make reasonable inquiries about some consumers' income and employment status before increasing their credit card limit.

Advertisement
Advertisement

In particular, ASIC was concerned that Westpac, in relying largely on its automated processes, was not making reasonable inquiries of individual cardholders, which is not consistent with the responsible lending obligations under the National Consumer Credit Protection Act 2009 (the National Credit Act).

Westpac has committed to a number of steps to address ASIC’s concerns, including changing its credit limit increase processes to ensure that, at a minimum, reasonable inquiries are made about a customer's income and employment status to ascertain their financial situation before the limit is increased.

In addition, Westpac has committed to a remediation program involving a review of credit limit increases previously provided where a cardholder experiences financial difficulty, with consumer refunds paid where appropriate.

The major bank will also be engaging an independent external expert to provide assurance of the effectiveness of the remediation program.

Westpac will also make a $1 million payment to support financial counselling and financial literacy initiatives.

“Credit card issuers, like all consumer credit providers, have to meet obligations under responsible lending laws,” said Michael Saadat, ASIC senior executive leader of deposit takers, credit and insurers.

“ASIC maintains an ongoing focus on compliance with these laws. Where we see non-compliance, we will take action, including taking steps to ensure affected consumers are appropriately remediated,” he added.

ASIC acknowledged the co-operation of Westpac in resolving this issue, including suspending its sending of credit limit increase invitations until ASIC's concerns were resolved and Westpac's processes improved.

[Related: ASIC targets first lender in mortgage market probe]

Major bank reacts to ASIC lending concerns
mortgagebusiness

 

Latest News

Record-low interest rates and trade tensions between the US and China are stifling consumer spending, Treasurer Josh Frydenberg has acknowle...

Residential construction activity is to remain subdued over the coming year, according to the RBA, placing upward pressure on home values...

The online SME loan comparison platform has announced that it has closed a $12.5-million series B equity funding, with Salesforce and ANZ su...

FROM THE WEB
podcast

LATEST PODCAST: Transparency around rate cuts

Do you think the mortgage market will see more consolidation this year?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.