First banking class action post Royal Commission filed

21 February 2019
The first class action against a big four bank since the publication of the Hayne Royal Commission Report has been filed today in the Federal Court, with Australia’s leading class action law firm Maurice Blackburn Lawyers taking on Westpac for providing loans in breach of responsible lending laws.

The action has been undergoing careful preparation for months and has secured the support of global litigation funder Harbour. The class action is being taken on behalf of people who, after 1 January 2011, were given unsuitable loans by Westpac in breach of its responsible lending obligations.

Principal lawyer with Maurice Blackburn, Ben Slade, says that despite widespread criticism of its lending practices from the corporate regulator ASIC, and the Banking Royal Commission, Westpac has remained unrepentant.

“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,” Mr Slade said.

“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.”

Leading the action will be Michelle and Ian Tate, who, as a result of Westpac’s irresponsible lending practices, have endured serious financial difficulties. Westpac failed to verify, as it is obligated to do, information concerning the Tate’s financial circumstances. This information was provided to Westpac by a broker. In total, Westpac lent the Tates – a family of five with one regular income – in excess of $1.8 million across five properties from 2008-2016.

Mother of three Michelle Tate said that the family will now lose all their properties save for a block of land and have suffered significant loss in the process.

“Dealing with Westpac has devastated us. Everything we were trying to achieve is lost. 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,” Ms Tate said.

The case has been filed today in the Federal Court. It is supported by litigation funder Harbour Fund IV, L.P. Those with Westpac home loans from the first of January 2011 can register for the class action online at www.mauriceblackburn.com.au/westpac .

Summary of responsible lending laws

 Since 1 January 2011, the National Consumer Credit Protection Act 2009 has prohibited a credit licensee (a lender, or a bank) from entering credit contracts with consumers unless the lender complies with strict requirements. Those requirements were introduced to protect consumers from the risk of financial hardship, and to ensure the fair and equitable treatment of all consumers.

Before entering into a credit contract with a consumer, a lender is required:

  1. To make reasonable inquiries about the consumer’s objectives and requirements in relation to the credit contract;
  2. To make reasonable inquiries about the consumer’s financial situation, including the consumer’s income and expenditure; and
  3. To take reasonable steps to verify the consumer’s financial situation, including the consumer’s income and expenditure.

Having made the reasonable inquiries and taken reasonable steps to verify the consumer’s financial situation, the lender is required to make an assessment of whether the credit contract is unsuitable for the consumer.

A credit contract is unsuitable for a consumer if at the time the contract is entered:

(a)  It is likely the consumer will be unable to comply with the consumer’s financial obligations under the contract, or could only comply with substantial hardship; or

(b)  The contract does not meet the consumer’s requirements or obligations.

A consumer who has suffered loss or damage, or is likely to suffer loss and damage, as a result of a contravention of responsible lending obligations, may seek damages and other compensation orders.

Media inquiries: Cameron Scott at Maurice Blackburn T 03)96052832 / 0400 876 466  E  cscott@mauriceblackburn.com.au