In the wake of their big legal win against ASIC this week, Westpac has announced its plan to improve its loan policies.
In a tune-up designed to sharpen lending, the major bank will change lending policies to become more rigorous in assessment, to go deeper into the details of household spending and to use new debt-to-income analysis of high-risk loans.
Westpac will start to rollout the changes today and should be implemented fully by September in both retail and broker channels.
This week the Federal Court dropped the case brought against Westpac by the Australian Securities and Investments Commission.
ASIC also has to pay Westpac’s costs in the responsible lending case in which ASIC alleged they breached responsible lending laws on over 250,000 home loan approvals made using HEM benchmarks instead of using each applicant’s individually assessed living expenses.
In response to the loss, ASIC is planning revisions to controversial responsible lending rules.
Westpac’s changes will also apply to its smaller offshoots, BankSA, St George Bank and Bank of Melbourne.
The changes will feature six policy changes that include raising the HEM, toughening debt assessment, margin loan serviceability and tax debt treatment.