The Mortgage & Finance Association of Australia (MFAA) has introduced updated support — dubbed the Referrer Risk Management Guidance — to help brokers better identify and manage potential fraud risks associated with referrals across Australia's lending landscape.
"The fraud risk environment is evolving rapidly, with increasingly sophisticated methods and changing business models creating new challenges across the lending ecosystem. Referral relationships are one potential entry point for fraud," Naveen Ahluwalia, executive, policy and legal, told Australian Broker. "Someone presenting as a legitimate source of clients may supply false documents, misrepresent a customer’s circumstances, or become involved in activities beyond a straightforward introduction. An established relationship can also create a sense of familiarity that makes changes in behaviour easier to overlook. Our referrer guidance helps members recognise those warning signs, set clear boundaries and apply proportionate checks throughout a referral relationship."
The full guide, available to MFAA members, comes as mortgage frauds continue to stack up across the nation. In the fall, reports surfaced, suggesting that mortgage fraud had already become a multi-billion-dollar threat to Australia's lending sector. The news put brokers and lenders on alert, and prompted many to take a closer look at how loan applications are verified. A key feature of the schemes is the manipulation of financial information, with borrowers allegedly altering or fabricating income documents to qualify for loans beyond their genuine borrowing capacity. And as artificial intelligence tools become more sophisticated, fraudsters are increasingly able to produce convincing documents that can make those applications harder to detect.
But even before the advent of AI, Australia's mortgage industry had already undergone significant regulatory tightening, with brokers held to higher standards thanks to past concerns about misconduct and fraud. The 2017 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry probe led to sweeping reforms across the financial sector, including the introduction of the Best Interests Duty (BID) law, which requires brokers to act in the best interests of their clients.
In May of this year, Australian Securities and Investments Commission (ASIC) issued a warning over the growing cyber risks posed by artificial intelligence, and urged financial services licensees and company directors to take immediate precautions. ASIC later said fraud is one of its 2027 strategic priorities.
Meanwhile, referral relationships still make up a large avenue for brokers to build their businesses. Research by Deloitte for the MFAA’s Value of Mortgage and Finance Broking 2025 report found that referrals accounted for 40% of business leads. As a result, Ahluwalia argued that "there remains a need for clearer, practical guidance on managing referral relationships across the lending ecosystem.
"Scams and fraud create challenges for small brokerages, both as businesses that can be targeted themselves, and as trusted advisers supporting clients," she said. "For a small brokerage, identifying and investigating suspicious activity takes time away from supporting clients and running the business. Fraud can also have financial, reputational and lender accreditation consequences. Beyond the immediate disruption, an incident can undermine the trust brokers have worked hard to build.
"Our approach is ecosystem-wide and channel-neutral, recognising that referral risks can arise regardless of how a customer accesses finance," Ahluwalia continued. "Through our working group, we identified an opportunity to give members clearer tools and a consistent understanding of good practice, particularly where legislation sets boundaries, but provides limited detail on day-to-day risk management. Our role is to help members understand emerging risks and translate that understanding into practical actions within their businesses."
Anja Pannek, chief executive officer of the MFAA, added: "Trust is what our financial system runs on, and fraud anywhere along the lending chain has the potential to undermine trust everywhere in it. Protecting that trust is a collective responsibility. No single part of the ecosystem can address these risks alone. Our response has to follow the conduct and the evidence, rather than begin with assumptions about where the risk sits. That is why we have worked collaboratively with a cross section of our members to develop practical guidance that supports a consistent approach to identifying and managing referrer risks across the industry."
The guidance was developed by the MFAA, in collaboration with representatives from major aggregators and lenders, through the industry body's Fraud and Referrer Working Group. Available to members in the resources section of the MFAA website, the guide provides practical advice on assessing referral relationships, identifying potential red flags and strengthening safeguards against fraud. The risks covered include impersonation, payment redirection, compromised communications, and false information or documentation entering the lending process.
"The benefit of the guide is a clearer framework and useful resources that members can adapt to the nature, complexity and risk of their referral arrangements," Ahluwalia said. "We want members to feel equipped to manage these relationships with confidence."
In addition to the guide, the MFAA will host a member webinar on 5 November at 2 p.m. AEDT. The webinar — titled "Referrers, introducers and fraud: Managing risk in a changing landscape' — will focus on emerging risks, warning signs and practical tools for navigating referral relationships. Ahluwalia will host the webinar. Other panelists include Scott Stierli, general counsel, financial services at REA Group; Daniel Oh, group legal counsel at aggregator Connective; and Shirley Elliot, head of compliance and legal counsel at aggregator Australian Finance Group (AFG).
Ahluwalia said brokers should remain alert to several warning signs when dealing with referrers.
"A warning sign should prompt further enquiry," she said. "The appropriate response may include additional checks, file reviews, compliance support or temporarily suspending referrals."
Some red flags for brokers to watch for include:
"Longstanding referral relationships can be incredibly valuable," Ahluwalia said. "Reviewing them helps ensure they remain transparent, well understood and appropriate as businesses and circumstances change."
