"Westpac is committed to responsible lending and ensuring that we have a clear understanding of our customers' financial situation," the bank said in a copy of the new guidelines.

The changes, which are effective from last Saturday, refocus on disclosure of household expenditure, middle-aged borrowers' retirement strategy and loan term and more controls on verifying income and providing updates on any changes.

There are additional details on how to verify income, how to account for disability and other pension supplements plus updates on the use of payslips.

Some of the polices are a recap of earlier changes covering disclosure of all debts, statutory declarations about rental payments, any child support or maintenance commitments and property utilities, rates and related expenses.

Westpac launches more credit policy changes following bruising revelations at royal commission James Elsby

Other changes involved updating of the measures used for assessing household expenditure in response to changes in the consumer price index.

In May, Westpac hit out at the banking royal commission's publication of documents suggesting its lending controls were ineffective. It also claimed a PwC report had been taken out of context and confused the market.

The report investigated 420 Westpac loans and found that 38, or 9 per cent, did not meet the serviceability criteria, suggesting customers had been extended loans that were beyond their ability to repay.


The only "control objective" that was operating effectively was the documentation of the verification policies.

The other nine key controls required by APRA – including processes to ensure income and expenses – were deemed to be ineffective.

The tightening of Westpac's credit policies also follows allegations at the royal commission from a distraught customer about one of the bank's commission-earning advisers recommending unsuitable and expensive financial products.

The bank's image as a prudent lender was also damaged by client allegations of being sold inappropriate policies that generated large commissions for the adviser, Krish Mahadevan, but cost a family their home.

The new consumer credit policies have been sent to mortgage brokers, who are responsible for nearly half of its residential loans.

Westpac has been actively promoting its mortgage products with special introductory rates, incentives and competitive rates, particularly for owner occupiers.