Brokers who accept paperwork at face value are exposing themselves to serious risk, according to two senior industry figures, as AI makes convincing document manipulation more accessible.
“The days of a client dropping off a payslip to your office are over and will not protect you from the allegation of being complicit,” said Blake Buchanan (pictured left), general manager of Specialist Finance Group (SFG).
Their comments follow a recent OurTop10 survey in which 18% of respondents said they had used AI on home loan paperwork. Bank statements were the most common document created or altered, cited by 10% of the 1,018 people surveyed.
Buchanan and Christa Malkin (pictured right), general manager – aggregation at AFG, cautioned that the figure doesn’t by itself point to fraud. As Malkin noted, using AI could mean anything from tidying up a cover letter to fabricating a bank statement. Even so, both agree the risk is real.
Buchanan said brokers’ responsible lending obligations to verify a client’s financial situation remain firmly in place. “Passing a document to a lender doesn’t discharge that responsibility,” he said.
Lenders have improved their fraud detection, but Malkin said that doesn’t shift responsibility away from brokers. “The real risk is brokers assuming the lender’s technology will catch everything,” she said.
If a document looks suspicious, Malkin said brokers should first raise it with the client, as there may be an innocent explanation. If concerns remain, both advised holding off, documenting the issues, and escalating through the aggregator or licensee’s compliance team. A suspicion should prompt investigation rather than an assumption of guilt.
Regulators are also paying closer attention. The Australian Securities and Investments Commission (ASIC) has flagged a review of lender oversight of brokers and referrers, while the Mortgage & Finance Association of Australia’s (MFAA) fraud working group is developing new referrer risk management standards.
Malkin said altered documents usually come undone on the detail rather than the overall look. Warning signs include running balances that don’t add up, fonts or spacing that shift down a page, transaction descriptions that don’t match a bank’s formatting, and salary credits that don’t reconcile with payslips.
Buchanan said file metadata reveals a lot and noted that some would-be fraudsters are paying for subscriptions to generate “legitimate” payslips through payroll systems. These are caught by cross-checking against bank statements, Australian Taxation Office (ATO) portals, and other sources.
Malkin added that some fraud, such as salary staging, involves real but misleading transactions that only careful questioning will expose.
SFG and AFG agree the industry is moving towards verifying data directly from the source, through open banking, bank statement retrieval, and employment verification services, with the client’s consent.
The two also backed adding ATO income data to the verification toolkit, which Malkin said would be particularly useful for self-employed borrowers. But Malkin warned that digital data “confirms the numbers are real, not that the story behind them is complete, so broker judgement still matters”.
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