A former WA broker who is facing fraud charges has claimed banks actively encouraged fraud during credit boom times to get low doc loans approved, sending emails to brokers with 'tips'.
Kate Thompson told the ABC last night the banks "are corrupt. They are protecting each other."
She said banks would email brokers with tips on how to sidestep regulations, which often involved fraudulently inflating the income of applicants.
"I would get upfront commission. I would get a trailing commission. I was probably earning about $5 million a year. It was great. It was wonderful. But it was all a lie," she said.
The issue of low doc fraud is in the spotlight this week, as a recent senate inquiry unearthed claims of unethical behaviour in Australia's financial industry.
Denise Brailey, from the Banking and Finance Consumers Support Association, told the senate she had hard evidence of fraudulent activity on the part of brokers and banks.
"I received 4,000 emails, and in those emails from the banks to the brokers you'd see clearly bank officers instructing the brokers how to have no-
loan mortgage insurance, no income necessary, no assets and liability, virtually just get a signature on a document, send it in and we'll give this person, no matter what their income or affordability criteria is, give them a $500,000 loan," she said.