Whether Westpac wins or loses this case, all Australians will pay for this. One way or another. The only certain winners will be the lawyers.
Westpac is facing the first class action against a major bank in the wake of the Hayne royal commission into financial misconduct, with plaintiff firm Maurice Blackburn taking on the bank over responsible lending.
Maurice Blackburn on Thursday said it had filed the lawsuit in the Federal Court, and the lead claimants in the case would be Queensland couple Ian and Michelle Tate, who borrowed $1.8 million from the bank across five properties between 2008 and 2016.
So what is this case about? Well, according to Our ABC:
A Queensland couple is considering legal action against Westpac, arguing the bank failed to lend responsibly and that it ultimately cost them their family home.
Ian and Michelle Tate were planning for their future when they took out three loans for four investment properties in 2008, 2013 and 2014.
Those evil negative gearers and property speculators. Let’s tax them into oblivion.
Apparently you see, the Tates borrowed $1.6 million using the properties and their primary home as security against the loan. But the Tates:
discovered their loan applications grossly underestimated their monthly household expenses and that the interest-only periods were set to expire.
Mr Tate said:
I guess the brokers got their money, the banks were happy, they’ve got what they want, and at the end of the day here we are renting.
At the time, it seemed pretty easy [to get the loans]. They were just sort of handing money out.
The banks got what they wanted. The brokers got what they wanted. What did the Tate’s get? THE MONEY THEY ASKED FOR.
What else did the Tates say?
Westpac never asked any detailed questions about their expenses.
This is another way of saying that Westpac believed what the Tates said and attested to by signing their loans.
Fair dinkum. How underhanded can a bank be when they trust and believe what their customers tell them. Off with their heads.
If the Tates win this case, Westpac will have to cough up. And how will it do that? It will either have to pass it on to other Westpac customers or reduce its payments to shareholders and the ATO. Or both. No free lunches in this world.
If the Tates lose his case, perhaps their solicitors advise them to sue the Queensland government for economic mismanagement that contributed to the decline in Queensland property prices? Will they be able to sue for stamp duties paid? Oh and Westpac will have to pass on the costs of defending the case through the above recovery pathway.
This case also presents an interesting proposition for the banks. If their borrowers under estimate their expenses, get a loan and blow up and then ask for their money back when they blow up, should then the banks be able to ask for supplementary interest from borrowers who under estimate their expenses, get a loan and make a motza from their property speculation?
TAFKAS is sure that the architects of the brilliant regulatory schemes that operate in Australia will be able to work this one out.