WBC 0.55% $33.13 westpac banking corporation

News: WBC UPDATE 1-Australia's Westpac sued for making loans consumers could not repay

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    • Class action lawsuit focused on irresponsible lending
    • Follows bank settling similar case with corporate regulator

    (Adds background of previous lawsuit)

    SYDNEY, Feb 21 (Reuters) - Australia's Westpac Banking Corp (WBC) was sued on Thursday by consumers who said the bank made them loans they could not afford to repay and in violation of banking regulations.

    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 UK-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, did not have an immediate response.

    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)

 
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