Financial Counselling Australia welcomes the decision by corporate regulator ASIC to appeal a recent Federal Court judgment that found Westpac was not required to consider the declared living expenses of more than 260,000 home loan borrowers.
ASIC commissioner Sean Hughes said the regulator acted because the decision created uncertainty as to what is required for a lender to comply with its assessment obligation. ASIC also regarded the decision as inconsistent with the legislative intention of the responsible lending regime.
Financial counsellors regularly bear witness to the stresses caused by irresponsible lending – it is not just the fact that assets have to be sold. It is the flow-on effects to people’s physical and mental health and the relationships that fracture. Irresponsible lending can have traumatic consequences for borrowers.
Commissioner Hughes said in a statement that the “Credit Act imposes a number of legal obligations on credit providers, including the need to make reasonable inquiries about a borrower’s financial circumstances, verifying information obtained from borrowers and making an assessment of whether a loan is unsuitable for the borrower.”
Australia is already one of the most over-indebted nations, largely because of past irresponsible lending practices. The fundamental purpose of our responsible lending laws is to prevent harm by requiring robust standards of lenders in their assessment processes.
An Opinion-Editorial article by Fiona Guthrie and Gerard Brody, CEO of Consumer Action Law Centre, published today in The Age, called for ASIC to lodge an appeal against the Federal Court decision.
For further information: Fiona Guthrie, CEO, Financial Counselling Australia, 0402 426 835