ASIC boss James Shipton has revealed the regulator is mulling whether to lodge another appeal in its unsuccessful responsible lending case against Westpac.
Shipton told a hearing of the Senate corporations and financial services committee on Wednesday that the regulator had sought external legal advice on the prospect of appealing the case in the High Court.
The full bench of the Federal Court last month upheld a decision Westpac had not breached federal responsible lending laws by using an automated system to assess the home loan applications of more than 100,000 customers.
ASIC alleged that Westpac committed systemic breaches of the lending laws because the automated system did not take into the declared expenses of loan applicants.
In response to questions from committee chair James Paterson, Shipton said a final decision on whether to proceed with an appeal would be made in the “coming business days”.
“We’re currently taking advice on the decision of the Full Federal Court and that advice is coming from an external counsel,” he told the committee.
“We will be reviewing that advice in the coming days…we’re taking this decision very seriously.”
Senator Paterson later asked whether “it was wise” for ASIC to mount an appeal because it might create further uncertainty as to requirements of the responsible lending laws.
Shipton declined to answer the chairman’s question, arguing that his response could compromise ASIC’s legal case if it decides to appeal.
“We’re yet to sit down as a formal commission to make a final decision,” the ASIC boss told the hearing.
“We just need to digest all the opinions and advice we’ve received on this matter.”Shipton also took on notice a request from Paterson for ASIC to furnish details of how much it had already spent running the case.
NSW Labor senator Deborah O’Neill grilled Shipton and other ASIC officers on the slowness of the major banks and other financial institutions to remediate more than 2 million customers who were victims of misconduct identified by the Hayne Royal Commission.
O’Neill asked Shipton why the major banks were allowed to hire professional services firms such as EY and PWC to help manage the cost of their remediation programs.
The ASIC chairman said the regulator currently did not have a directions power to influence how financial institutions conducted customer remediation.
“I share your frustration,” he told O’Neill.
“We continue our robust conversations with financial institutions on accelerating these remediation programs and unnecessarily relying on external consultants.”
The Morrison Government is expected to enact reforms in December that would give ASIC more power to expedite large compensation programs.
ASIC deputy chair Karen Chester told the committee the regulator was currently overseeing 89 remediation activities across the financial services industry that arose from misconduct by 100 licensees.
So far less than a quarter or A$828 million of the total estimated compensation had been made to consumers.
“We are expecting a further $2.99 billion to be returned to just over two million customers,” Chester told the committee.
“The remediations are not expected to be completed for another 18 months.”