Westpac faces class action suit

WESTPAC is facing a class action for allegedly approving home loans to people who had no prospect of repaying them.

The Federal Court action is the first against one of the big four banks since a royal commission delivered damning findings about the conduct of Australia’s financial institutions.

Law firm Maurice Blackburn claims Westpac breached its obligations to protect customers from financial harm by failing to establish if they could afford repayments.

Lead plaintiffs Michelle Tate (pictured) and husband Ian say they are ruined after Westpac loaned them more than $1.8 million across five properties, when the family-offive had just one income to service that debt.

Mrs Tate says Westpac trusted a loan broker who provided information about her family’s financial position, and did not independently verify the situation.

She says her family will now lose all of their properties and described her dealings with Westpac as devastating.

“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,” she said. “It is worse than being back to square one.”

Maurice Blackburn believes thousands of Westpac customers may join the action, which applies to loans issued from January 1, 2011.

The firm will argue Westpac failed in a number of ways to properly check if home loan customers would be able to meet repayments.

Allegations include that the bank wrongly assessed the ability of borrowers to repay loans using the Household Expenditure Measure – a benchmark that estimates someone’s household expenses.