Westpac has been hit with the first class action stemming from the royal commission into financial services after the big four bank was accused of irresponsible lending.
Michelle and Ian Tate will lead the class action, claiming they have endured serious financial difficulties since the bank issued five mortgages worth in excess of $1.8 million to the couple with three children and just one regular income.
“Dealing with Westpac has devastated us. Everything we were trying to achieve is lost,” Michelle Tate said.
The family now claims they will lose all five properties they once owned, except for a single block of land.
“Instead of striving for financial independence, we are back living pay cheque to pay cheque, tax return to tax return. We have gone backwards after years of hard work and struggle. It is worse than being back to square one,” she added.
The class action was filed in the Federal Court on Thursday by law firm Maurice Blackburn for customers who were provided loans by Westpac that breached the bank’s responsible lending obligations.
“Westpac’s response to Commissioner Hayne’s findings in the Financial Services Royal Commission, and to the ongoing proceedings brought by ASIC in relation to Westpac’s responsible lending obligations does not reveal any acceptance by Westpac of its obligations to compensate those who have suffered, and are suffering, at the hands of the company,” Maurice Blackburn principal lawyer Ben Slade said.
The contention is that Westpac issued loans automatically based on the Household Expenditure Measure (HEM)- an estimate of the cost of essential spending such as electricity on top of some small discretionary spending- which provided an incomplete view of customer’s ability to repay loans.
“Westpac is required to comply with strict obligations which are specifically designed to protect consumers from irresponsible lending and the risk of financial hardship. This case will seek to prove that Westpac failed to comply with these obligations and that this failure caused substantial losses for many consumers,” Slade added.
The loans in question were issued after 1 January 2011 and have been an ongoing issue for the bank after Federal Court ruled that a $35 million settlement struck with watchdog ASIC was insufficient in November last year.
YourMoney.com.au has sought comment from Westpac.