Westpac Banking Corporation’s [ASX:WBC] share price continued its downwards trend this morning, falling 0.51% shortly after opening.
The bank has lost nearly 10% of its share value in less than a month following a $35 million settlement with ASIC over a breach in responsible lending laws. You can find details of the settlement in my article from last week.
At time of writing, Westpac’s share price is sitting at $27.59 — down just over 13% from this time last year.
Westpac’s potential lawsuit
As reported by the ABC, Westpac could face a lawsuit by its customers, funders and investors for the lack of care with lending control.
Josh Mennen, a principal at law firm Maurice Blackburn, told the ABC that Westpac’s admission to the breach puts the bank at risk of a civil action by customers provided with too much credit:
‘In circumstances where people find themselves in default on their mortgages they will be able to bring an action against Westpac, potentially, for breaches of responsible lending laws.
‘It is early days in relation to any class action, but I don’t think anyone who has been following this could seriously rule out the possibility of a class action being brought.’
In addition, the ABC highlighted that if default rates rise, international investors who funded Westpac mortgages or invested in residential mortgage-backed securities could also have a case.
What can we expect to see?
It is early days, so there’s no way of telling exactly how this will play out just yet. Although, the fact that the spotlight is not only on Westpac right now, but the whole financial industry, is an upside for the bank.
Investors will be hoping that Westpac has what it takes to get this under control.
For Markets & Money
PS: Interest rates could hover at these super-low levels for the next 100 years…but this four-pronged strategy could help you avoid the fallout. Click here to learn more.