Westpac has dropped its plan to offer “instant mortgages” as banks’ lending practices come under increased scrutiny.
The Australian Financial Review reported on 28 January that Westpac confirmed a plan to offer instant mortgages had been abandoned. The project had been active until as recently as late 2017.
The plan would have allowed Westpac to offer clients a nearly instant approval, or provisional approval.
Despite dropping the project, Westpac will continue to streamline its process for mortgage application and improve its turnaround times for housing borrowers, said the report.
The bank will go ahead with plans to extend innovations for its business clients and residential mortgage customers as it works to bolster its mortgage capabilities and protect its market share. These innovations include e-document signing and other technology-based solutions.
A Westpac spokesperson said the bank took its lending duties seriously and that it was always looking for ways to improve its mortgage lending experience for customers while complying with regulatory requirements, according to the report.
ASIC initiated civil proceedings against Westpac in March last year for its alleged failure between December 2011 and March 2015 to properly assess if borrowers could repay their housing loans.
The regulator said in its allegation that the bank relied on a benchmark to help it decide how much to lend to potential borrowers, instead of using actual expenses declared by borrowers.
Westpac has denied ASIC’s claim.
The Australian Financial Review said in its report that the bank was preparing for a courtroom fight with ASIC over this allegation.
Banks’ lending practices are expected to come under further scrutiny as the royal commission kicks off its investigation of misconduct in the banking, superannuation and financial services industry. The commission will hold an initial public hearing on 12 February.
