Following numerous revelations at the recent banking royal commission, Westpac has announced that it will stop accepting consumer home loans for predominantly business purposes.
Under Westpac Group’s updated consumer credit policy, consumer mortgages (including loan top-ups) will not be accepted if more than 50 per cent of the new loan is expected to be used for business purposes.
The update comes into effect on 18 June, and changes will be made to the ApplyOnline platform to prevent business purpose loans from being submitted from 19 June.
The revised policy stipulates that in instances where the predominant purpose of the loan is business-related, a business product must be offered and the application must be referred as per Westpac’s existing referral process.
This month, the major bank said that it was in the process of developing its own business products, which it cited as one of the reasons for deciding against renewing its direct referral relationship with small business lender Prospa, alongside low referral volumes.
Westpac’s updated consumer credit policy also clarified that the maximum age of documents provided at the formal application stage is six weeks, not 12 months.
A spokesperson from the major bank told My Business’ sister publication The Adviser: “The change means that customers with business needs are provided with the appropriate product and support via our business banking teams, and ensures we continue to meet our reporting requirements around the provision of capital.
“Additionally, the change is a clarification of policy and is aligned with our other policy requirements.”
It comes after Westpac-owned Bank of Melbourne was lambasted for withholding funds from a property settlement in a transaction unrelated to the customer’s B&B property, which combined the B&B and residence with an on-site restaurant.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.