The corporate regulator has announced it will not appeal to the High Court's rejection ofits case against Westpac for alleged responsible lending breaches.
ASIC commenced federal court proceedings against Westpac in 2017 alleging that between December 2011 and March 2015 the bank failed to properly assess whether borrowers could meet their repayment obligations before entering into home loan contracts.
In August 2019, the Federal Court found Westpac had not breached the responsible lending provisions of the Credit Act and judge Nye Perram said a lender may do what it wants in the assessment process for loans.
ASIC appealed the decision in September 2019, but that appeal was dismissed by the Federal Court in February 2020.
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The regulator said it would have been open to seeking special leave to appeal to the High Court but it is mindful of the impact of the additional time it would take to resolve during the current economic environment.
ASIC will now review its updated regulatory guidance RG 209 (credit licensing: responsible lending conduct) and will consider what implications the Federal Court decision has for that guidance.
"Any reform of the National Consumer Credit Protection Act (National Credit Act) to clarify further the enforcement of those principles is ultimately a matter for the Federal Government and Parliament.
"Bearing in mind the economic circumstances, it is important to remember that under the National Credit Act, 'responsible lending' obligations do not apply, and never have applied, to loans made for business purposes," ASIC said
The case was referred to as the "wagyu and shiraz" case after the presiding judge said: "Whether it be Wagyu beef washed down with the finest Shiraz (to use the example of the primary judge), or less expensive expenditure on food and drink, this may not be willingly forgone or even able to be reduced by a particular consumer.
"The unsuitability of a loan cannot be determined if the focus is not on the particular consumer, applying criteria divorced from that consumer's circumstances."