A tough post-GFC credit market is driving more brokers than in prior years to do the wrong thing when it comes to getting loans approved, according to the MFAA.
The peak industry body has expelled a total of eight brokers from its membership in the 2011/2012 financial year, a record and a number double that of the previous financial year.
The MFAA said the record number of expelled members were found by its Disciplinary Tribunal to have engaged in 'serious misconduct' by submitting fraudulent loan applications to lenders. The majority of the expulsions [see table] covered loan applications where income and savings data of the applicant was dishonestly reported.
MFAA CEO Phil Naylor said there was no material change in the number of complaints being received about its brokers, but the post-GFC market was having an impact.
“I think the driving factor is that as business slows down a very small number of brokers are tempted to do the wrong thing in order to get loans approved,” he said.
“There is an old saying that ‘when the tide goes out, the rocks appear’ and I think that’s apt for the experience over the past year.”
Naylor said that greater scrutiny in the face of the NCCP has also played a part in lenders and aggregators identifying fraudulent and dishonest activity.
MFAA statistics show that all bar one of the expelled members had been members for five years or less. The exception had been a member for 7 years.
Naylor said that such disciplinary action shows the association’s determination to ensure the highest professional standards and very high education standards.
“We expect that the mortgage broker share of the market will expand further this year and the MFAA will continue to be vigilant in weeding out the very few rotten apples in the industry.”
The membership of the MFAA is currently 11,200, making its expulsions a small percentage.