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