A high-ranking official at ANZ has admitted that the bank does not verify general expenses of customers’ loans originated by brokers. In his testimony before the Royal Commission on Monday, the bank’s general manager of home loans and retail lending William Ranken said it is up to the individual brokers themselves as they are acting as agents for the customers.
In response to a query by Senior Counsel Assisting Rowena Orr, Ranken confirmed that there was no incentive for ANZ brokers to scrutinize customers about expenses – because they know the bank will default to higher of declared expenses or the household expenditure measure (HEM).
“They have their own obligations under their own licensing requirements to ensure the product’s not suitable for the customer and understand their customer’s position,” said Ranken. However, he added the bank requires that living expenses be included in brokers’ “initial conversation” with customers.
Ranken said the lender does “not necessarily” take any steps to deal with inconsistencies between customers’ expenses and bank statements held by ANZ. “The fact there’s an inconsistency of itself doesn’t mean that the customer’s stated living expenses are incorrect.”
He added that reviewing inconsistent information would be “would be highly complex, very time-consuming, very costly, and ultimately not necessarily that helpful.”
All broker initiated ANZ home loans since March 2017 have been subject to manual assessment. Ranken said the brokers have their own specific mortgage origination platform. “[W]e think it’s prudent that we should manually assess those applications.
According to figures provided by Ranken, 177,604 home loan applications were submitted to ANZ from Otober 2016 to the end of September last year. Of that figure, more than half (58% or about 102,000) were submitted by brokers.
During that same period, ANZ sold approximately $67bn of home loans. Almost $38bn – or 56% of the sales – came from brokers.