SYDNEY, June 26 (Reuters) - An Australian appeals court on Friday threw out a regulator lawsuit against Westpac Banking Corp, saying the country’s second largest lender’s method for determining whether homebuyers could service their mortgages had not broken the law.
The case became one of the most closely watched of numerous regulator lawsuits against leading banks after a financial misconduct inquiry in 2018 and 2019 prompted a crackdown on a sector accused of rampant fee gouging and irresponsible lending.
The Australian Securities and Investments Commission (ASIC) had lodged the appeal after a judge found in the bank’s favour last year, saying borrowers could cut back on “wagyu beef ... washed down with the finest shiraz” to make repayments.
But a three-judge panel of the Federal Court found again that Westpac did nothing wrong by using an automated system rather than manually checking each applicant’s living expenses.
“A consumer may choose to, and can be expected to, forgo particular living expenses in order to meet their financial obligations under a credit contract,” wrote one of the judges, Michael Lee.
Another judge, Jacqueline Gleeson, wrote that Westpac had not identified a single case among the 262,000 mortgage borrowers where the person was given a loan when they should not have been.
“The case concerned a large data set in which Westpac’s algorithm did not demonstrably fail to achieve the result for which it was said to have been designed,” she wrote.
In a market filing on Friday, Westpac acknowledged the appeal ruling without commenting further.
An ASIC representative was not immediately available for comment.
Reporting by Byron Kaye; Editing by Simon Cameron-Moore