An Australian federal court has rejected A$35m ($25m) fine imposed on Westpac by the regulator for breaching lending obligations.
The decision comes after Westpac admitted violating specific obligations while approving home loans between December 2011 and March 2015.
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In September, the bank also agreed to pay the $25m fine to the Australian Securities and Investments Commission (ASIC) to settle the issue.
Why the Westpac fine was rejected?
The federal court rejected the fine over ‘information vacuum’. It said that the regulator failed to prove any wrongdoings on the part of Westpac.
The Judge Nye Perram also noted that the ASIC has not demonstrated how the total fine was calculated, reported Reuters.
“It is unworkable to assess the reasonableness of the penalty if it is not known what is to be penalised,” the judge said in a written judgement.
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By GlobalDataFollowing the judgment, an ASIC spokesperson told the news agency that the regulator is currently reviewing the decision and did not comment further.
Over the period between December 2011 and March 2015, Westpac had approved 250,000 home loans. Of these, about 10,500 loans should not have been approved.
It has been alleged that these home loans were approved by the bank without properly assessing customer’s repayment capacity.
In March 2017, ASIC started investigation of the violations.
Westpac is said to have upgraded its systems in 2015 to avoid such incidents in the future.
