Industry veteran relegates fraud to the past

by Caroline Dann27 Aug 2012

Ray Weir, the former CEO of the FBAA has lodged a submission to the Senate Economics Inquiry to address what he says is misleading testimony from fraud whistle-blowers. 

His arguments centre on claims from Banking and Finance Consumer Support Association president Denise Brailey, who had told the inquiry low doc fraud was systemic and could cripple the economy.
While he acknowledged her fraud claims “have relevance to the period prior to the introduction of the NCCP” in 2010 “they are significantly less relevant in today’s lending market.”
He said all lenders and brokers – regardless of any possible prior indiscretions – were forced to clean up after the NCCP was put in place.
"While it was possible prior to the NCCP for dishonest borrowers and unscrupulous brokers to make up a figure...the new regulatory environment and practice standards introduced by lenders minimises this type of fraud."
“I also do not subscribe to [her] ‘big bang theory’ regarding the introduction of low doc lending in the late 90s,” he said.
According to Weir, low doc lending was introduced by non-bank lenders with “funding sourced from the US.”
His recollection of events is supported by anonymous industry sources who contacted Australian Broker Online, although they went further and claimed the ‘loosening’ of rules and ethical practices coincided with banking deregulation.
Weir did, however, offer a stark warning about the efficacy of the NCCP without ASIC’s support.
“Despite the implementation of the NCCP, it won’t achieve the desired results if it is not effectively policed by ASIC.”
Low doc fraud is strenuously denied by Australia’s banks and leading broker bodies, including the MFAA.


  • by Patrick 27/08/2012 11:10:16 AM

    Ray Weir's comment about enforcement is particularly relevant. I suggest that both ASIC and ACCC have a track record of kicking around the small guys to gain publicity but do not take on the major instutions. There was no lack of regulation in the case of Storm Financial and the institutions who distributed loan and investment products through them. That the Statements of Advice were generic and often unsuitable or inappropriate for the client circumstances has been clearly revealed after the fact. That the relevant institutions were also AFS licensees and knew or ought to have known the advice requirements appears to have been disregarded. Had those institutions sought to comply with the spirit of the law as good corporate citizens they would have refused or limited supply of products to many if not most Storm clients. Similarly it has been my experience that non compliance with the Trade Practices Act is systemic among large corporates, particularly the Sec51AC unconscionable conduct provisions. Large corporates routinely exercise their advantage in bargaining power unethically and unreasonably and nothing is done by ACCC. Compliance regimes require costly administrative procedures for the honest majority. When not enforced against the wayward few, these laws become pointless.

  • by sidbroker 27/08/2012 1:10:16 PM

    To Patrick, The point is that these institutions go after the small business people to justify there postion or jobs rather.

  • by Faud Broker 31/08/2012 1:22:50 PM

    So fraud was done before 2010. REALLY. Shock horror, we know this we have many brokers saying yes we did it before 2010.
    Now let the courts begin to repay those who were damaged by FBAA and MFAA Professional Brokers. Why start now with doing the right thing. Oh I forgot under the new code brokers go to jail.
    The courts are getting tough on the pre 2010 shonky brokers and banks. Keep the precedents coming. Any so called professional broker who stuffed up for the easy buck should be looking over their shoulder. Have zero time for born again brokers. I can hear the cries now it was the clients fault, some maybe but also it’s the shonky brokers who were not professional and did not do the right thing or legal thing for the clients as they should have been doing in the first place. Think about it, do the wrong thing now with the code and you go to jail. Why because there were many brokers and yes banks that screwed over people that’s why the law has changed.
    Also we won’t forget the FBAA or MFAA that are also in the crosshairs, what for? How about not doing enough and letting the public think the brokers using the logos on the websites and paperwork are trusted. FBAA and FBAA induced the public to think they were dealing with a professional regulated person what a joke pay the fees use the logo go rip people off.
    Remember the storm clients and many others, 35,000 people so far will be going to, or back to court . Its broker season and yes I am pissed as hell. Do I have axe to grind. Yes and do I care no because the brokers did not give damm when I sort PROFESSIONAL ADVICE . Let’s see if a few brokers lose their homes and if they go for fraud. They don’t have insurance to cover them. Let’s see how it feels, but hey they did to themselves AND they know who they are.
    Can’t wait to her the replies on this post.