ASIC to shine spotlight on broker fraud

The regulator has highlighted “gatekeeper culture and conduct” as one of the key risks within the financial services industry

ASIC to shine spotlight on broker fraud



The Australian Securities and Investments Commission (ASIC) has flagged gatekeeper culture as a key risk in the finance and credit industry, promising to put the spotlight on lending practices in the broker community.

In a report released yesterday (22 August), ASIC Enforcement Outcomes: January to June 2017, the regulator said that gatekeeper culture and conduct was one of its main priorities.

“We are focusing on culture and incentives that result in poor financial advice, irresponsible lending and mis-selling to retail investors and consumers, which can undermine trust and confidence in the financial system,” ASIC wrote.

ASIC will attempt to enforce higher standards in the financial services industry, looking at responsible lending in the consumer credit space including “what is expected of lenders in assessing loans (eg fraudulent loans) submitted by mortgage brokers”.

The regulator has the power to recover expenses from individuals under investigation who caused those costs to be incurred in the first place.

“We have the power to make an order to recover our costs where, as a result of an investigation, a person is convicted, a judgment is awarded, or a declaration or other order is made.”

This includes salary costs for ASIC staff working on the investigation, associated travel expenses, fees for external legal counsels, and charges related to expert analysis.

From January to June, ASIC commenced 57 investigations and completed 80. In total, 59% of instances of misconduct dealt with by ASIC were breaches of the National Consumer Credit Protection Act (NCCP). This includes actions such as dishonest conduct, misleading statements, misappropriation, theft and fraud by credit providers or credit licence holders.

At the same time, five individuals were charged in criminal proceedings including former Westpac home finance manager David St Pierre who was charged with dishonestly using his position by convincing the bank to deliver property valued at around $2.5m for a now failed Tasmanian property development scheme.

Although St Pierre was initially sentenced to three years in prison, the court ordered that he be released after six months on a $1,000 recognisance order and a three-year good behaviour bond.

Related stories:

Judge's decision cracks open $1.9m fraud case

AFP arrests director linked to $2.5m loan scandal

Major bank home loan manager jailed for fraud

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