ASIC has commenced civil penalty proceedings in the Federal Court against Westpac Banking Corporation for a series of alleged breaches of the National Consumer Credit Protection Act's responsible lending provisions.The initial details of ASIC's case against Westpac were released yesterday, and cover the period between December 2011 and March 2015. These proceedings stemmed from ASIC's review of the responsible lending practices of 11 lenders providing interest-only home loans.ASIC's main contention, as explained in documents lodged with the Federal Court, is that under the Act, credit providers must make reasonable inquiries about a borrower's financial situation and assess whether a loan contract will be unsuitable for the borrowers, and Westpac failed to do that in regard to seven borrowers.The corporate regulator argued Westpac relied too heavily on an automated loan assessment process that: •    used a household expenditure benchmark instead of the (much higher) expenses declared by borrowers in assessing their ability to repay the loan;•    approved loans where a proper assessment of a borrower's ability to repay the loan would have shown a monthly deficit - that is, the loans approved were too large; and•    did not differentiate for home loans with an interest-only period, and so failed to recognise that repayments at the end of the interest-only period would be higher than for loans that allowed principal and interest payments over the same periods.As a consequence, ASIC argued, Westpac had failed to properly assess whether borrowers could meet their repayment obligations before entering into certain home loan contracts.Westpac issued a media statement confirming it will defend the Federal Court proceedings, including the specific allegations made by ASIC regarding seven loans, which it said "are currently meeting or ahead in repayments".The court action does not concern Westpac's current lending policies or practices, the bank said."It is not in the bank's or customers' interests to put people into loans that they cannot afford to repay," George Frazis, Westpac's consumer bank chief executive said via media release. Westpac disputed ASIC's claim that it relied solely on the Household Expenditure Measure, published by the Melbourne Institute for Social Economic Research, without regard to a customer's declared expenses in its unsuitability assessment."Our credit policies are informed by our deep experience and understanding of the mortgage market," Frazis said. "They include a consideration of customers' specific circumstances, including income and expenditure, previous repayments history and the overall customer relationship." Frazis added that Westpac's interest-only mortgages were assessed in the same way as a standard principal and interest loan, and did not increase how much a customer could borrow. The first day in court is set down for 21 March.