Financial regulator Australian Securities & Investments Commission (ASIC) has defended its move to appeal the Federal Court’s dismissal of its landmark case against Westpac.
The case revolved around the regulator’s allegations that Westpac approved mortgages without properly checking applicants’ credit.
James Shipton, chair at ASIC, explained that they appealed the court’s decision to prevent lending standards from going backwards after years of improvement.
"The interests of certainty ... and therefore the broader economy ... and therefore consumer protection would be best served (by this appeal)," Shipton told NZ Herald.
"There would be a greater harm in not appealing, as a result of the issues that we have and our senior counsel has."
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However, coalition MPs on the parliamentary join committee on corporations and financial services believed that ASIC was just creating additional uncertainty for borrowers and lenders.
James Paterson, chairman and liberal senator, said he’s concerned with the “policy implications” of the appeal – adding that there’s insufficient evidence that consumers had indeed been affected by the bank’s former loan regime.
When asked to provide specific evidence, ASIC said the purpose of the appeal was to focus on the structural integrity of the lending system instead of individual loans – emphasising that the move was “forward-looking consumer protection.”
Shipton further explained that they did not intend to make it harder for lenders to lend or prevent borrowers from having access to money.
"There is the risk indeed that lenders will (now) say that whatever is in ASIC's guidance ... and whatever is said in the (credit) act ... they'll act anyway. We're concerned that standards in responsible lending may very well drop," Shipton said.