Brokers in spotlight at royal commission’s hearings

by Manuelita Contreras27 Feb 2018

From fraudulent brokers to broker accreditation and arrangements, mortgage brokers will be in the spotlight at the royal commission’s first public hearings in March, along with fraudulent loan applications.

The commission announced yesterday that its first round of hearings will focus on aspects of banking and financial services providers’ treatment of consumers in connection with credit products -- including residential mortgages, car finance, and credit cards. 

It will hold its first round of hearings from 13 to 23 March 2018.

For residential mortgages, the commission will hear the case of NAB’s Introducer Program and fraudulent loan applications.

NAB’s Introducer Program had previously been mentioned in a home loan fraud court case when a former NAB mobile banker was charged last year with falsifying home loan documents and attempting to defraud the bank.

Banker Andrew Matthews was accused of getting dozens of customers to sign documents falsifying they had been referred to NAB through its Introducer Program between 2012 and 2016. 

As Australian Broker reported in November, NAB held an extensive review of its mortgage book and identified around 2,300 home loans that might have been submitted without accurate customer information and/or documentation, or correct information in relation to its Introducer Program. 

As a result of the review, it terminated 20 bankers in NSW and Victoria, and penalised additional 32 bankers, including reducing their remuneration.

The bank started a remediation program last year for some of its customers, and said then that it had engaged with ASIC to ensure the remediation program provided fair outcomes for customers.

For the royal commission’s inquiry into the arrangements and practices of financial services providers and their intermediaries, it will hear on:

•    Aussie Home Loans’ fraudulent brokers and broker arrangements, and
•    CBA accreditation of brokers and broker arrangements.

CBA’s credit insurance in connection with home loans, personal loans and credit cards will also be grilled at the hearings.

The other banks involved in the case studies the commission will look into are ANZ, Westpac, and Citi.

ANZ will be grilled again in relation to its former car finance business Esanda, a few weeks after a Federal Court judge fined it $5m for car loans approved by Esanda from three finance brokers. As Australian Broker reported last month, ANZ admitted 24 contraventions of the responsible lending provisions for these car loans and agreed to pay a $5m fine as part of the settlement.

The commission said a number of consumers will give evidence of their particular experiences, and that a representative of a consumer advocacy group will also provide evidence.

Consumer groups Choice and Consumer Action Law Centre have both made public submissions to the commission.

The commission said it will inform the entities that are the subject of consumer evidence, but reports say the major banks have already been told to prepare for cross-examination.


Related stories:

Royal commission targets lending first

Royal commission paper suggests focus of inquiry

Big banks not imposing gag orders for royal commission

 

COMMENTS

  • by Phil 27/02/2018 11:34:04 AM

    People do realise the NAB's Introducer Program was not related to brokers but was where the bank paid commissions to real estate agents, solicitors, accountants etc (i.e. people with no credit licence restrictions) to be introduced directly to their own staff lenders. The potential for outcomes not necessarily in the customers best interests were always there.

  • by Broker95 27/02/2018 11:39:18 AM

    Sounds to me like to PC & RC are targeting brokers - what about banks own staff ? As an experienced broker with 16+ years in the industry I have lost count of the number of times where a customer does not qualify or meet lending criteria - only to find out later that the local branches had subsequently approved loans. ALL lenders (whether a third party or staff) should have the same set of rules and be placed under the same scrutiny. Yes there are rogue brokers out there but for the majority they are professional who do the right thing.
    The PC & RC need to focus on the banks - because lets face it - they have been party to seriously poor form and from what we all know have clearly breached laws and their duty of care. Focus on that and eradicate the bad eggs from the big institutions - that will be a great start for all parties.

  • by Gary 27/02/2018 11:41:17 AM

    20 dismissals made by the banks, I am all for it, - but to have another 32 staff still in the system of the banks is annoying too say the least.

    They have proven to the employers of what appears dishonesty, or using the banking system for their personal financial gain.

    If this happened in the Broker area, ASIC would have a field day. Not good enough- Hopefully, of the known 32, life after Banking does not direct them to Brokerages.

    Where is the Name and Shame register, or should ASIC start one up , they know of 32 to start the list with.