There were miscalculations in the bank’s automated loan approval system.
Reuters reports that one of Australia’s largest lenders Westpac has agreed to shell out a record $25m (A$35m) for failures in its automated loan approval system that violated consumer lending law.
Of 260,000 loans approved from 2011-2015, Westpac failed to take into account living expenses for 50,000 and miscalculated another 50,000 borrowers’ ability to repay their debts, according to the Australian Securities and Investments Commission (ASIC).
The bank should also not have approved around 10,500 loans or around 4% of the total, said ASIC.
Earlier this year, Westpac was found to have the riskiest mortgage-book among the country’s top four banks which together account for about 80% of the Australian market, according to UBS analysts.
The move comes as the country’s financial regulators intensify the crackdown after a government-led inquiry laid bare allegations of corporate wrongdoing at the financial services sector including charging customers fees for no service, irresponsible lending and deception of regulators.
Here’s more from Reuters:
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