After ASIC has urged the federal government to grant the regulatory body broader powers to oversee bank managers in the aftermath of a string of financial planning scandals – an industry association spoke out saying the same scrutiny should be applied to branch managers and their lending activities.
When Australian Broker
asked brokers to share their experiences, stories about dubious lending practices were coming out of the woodworks.
Oscar Hvala, a mortgage broker at Aussie said he has noticed that banks engaging in questionable lending processes is not uncommon.
“I have always been surprised by how much easier an application seems to ‘fly’ through the channels when done through the branches, but for brokers, we have to split hairs.”
Hvala referenced a previous client of his who wanted to consolidate his debt. Upon a review of his client’s position, he noticed his client wouldn’t be able to service his loan debt as lenders won’t accept the family payment and other government pensions as qualifying income.
About a month later, Hvala found out his client had transferred his loan to another lender.
“I contacted the BDM of the new lender about this and confirmed that certain income was outside their policy. I asked how they could refinance him, as without the payments he could not service the loan. They couldn’t answer me in detail.”
Stephen Dinte, principal mortgage planner at Australian Mortgage Planners told Australian Broker
about a father and son who came to him for a loan to purchase a first home together. They were self-employed running their own business, which had made small net profits for the two years in review.
Initially they seemed like perfect loan candidates, but after Dinte reviewed their balance sheet, he noticed their business had an $80,000 tax liability – which related to unpaid GST and PAYG – and only $5,000 in the bank. The company was technically bankrupt.
“The business had paid no tax in the preceding 12 months. This then explained where the ‘deposit’ for the new home came from. I explained to them that I couldn’t assist them. They then took the financials and tax returns away and called me two weeks later to say that a lender had helped them.”
Shane Khoo, an adviser at Liberty
Network Services said current clients of his who are looking to refinance have just withdrawn a loan application with one of the major banks after they experienced a total lack of responsibility and duty of care by the bank.
“The male applicant rang the bank about refinancing his current home loan. Via the call centre, the bank arranged a valuation. They did seek some income details and loan statements from my client, which were provided.
“However, at no time was the female applicant ever interviewed – who is 50% owner of current home – and the male applicant said he never signed any documents or provided information such as living expenses.
“Not long after the valuation was received by the bank, my clients received home loan documents. My clients didn’t even know they had a formal approval from the bank.”
Brokers should contact the industry bodies – the FBAA
– if they have experienced similar situations or concerns.