Westpac pushes back against two strikes, shackling lenders

“That’s what everyone down Collins and Pitt St is waiting for, the big one, two strikes in a row, and I think it is distinctly possible … I didn’t think it was possible two or three years ago but today we are in the era,” Mr McKeon said.

Taking more time

Westpac’s Mr Maxsted poured cold water on the idea that banks weren’t “open for business”, saying it was simply taking more time to approve loans and meet its responsible lending obligations. He said the criteria the bank had to meet was rigid and was slowing the approvals process down.

“We are not pulling back lending. I can’t speak for the other banks, however there is this emphasis on responsible lending … of course we should be responsible lenders and at Westpac we are responsible lenders. But what you’ve got to do to prove you’re a responsible lender is the debatable point.”

Westpac has admitted it breached responsible lending obligations earlier this year, but the judge rejected the settlement and the case is headed back to court. The bank was being pursued over the processes that saw 10,500 loans approved automatically.

Mr Maxsted said he was upbeat about the prospects for the bank and the economy but warned of unintended consequences flowing from the Hayne royal commission’s final report due on February 1 which both the federal government and the opposition have pledged to implement in full.

“Some people are not getting through the net that were getting through before and maybe that’s a good thing … it’s a bad thing if young people like couples just starting out … if responsible lending is taking them out of the market, that’s a bad thing,” he said.

KPMG chairman Alison Kitchen noted Thursday’s comments from federal Treasurer Josh Frydenberg, who urged the banks to keep lending, risked putting the banks in direct conflict with the regulators who were attempting to ensure the banks were lending responsibly.

“It’s a tension because the companies are supposed to be running the companies how they best think, and not just jumping to whichever regulator tells them to do more or which politician tells them to do less,” she said.

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