Cleaners and realtors receiving bribes to bring home loan clients to ANZ have seen the bank dragged to court by the company’s watchdog.
- ASIC sues ANZ over 74 loans that may have violated national credit law
- The loans were referred to the bank by “introducers” – third parties who received commissions for sending customers down the path to ANZ.
- Royal Banking Commission heard testimony that some large-scale introducers were tailors or gym owners
ANZ’s Introducer Program paid a commission to third parties and helped the bank underwrite more than 50,000 loans worth at least $ 18.5 billion over just five years.
But the Australian Securities and Investments Commission (ASIC) today initiated civil proceedings in Federal Court regarding 74 of those loan applications, with allegations including fraudulent documents and “facilitating unlicensed individuals engaging in credit activities “.
The problem is not the specific profession of those who made the references, but the fact that they were supposed to be people with specific knowledge of client finances, such as accountants and financial planners.
People who give personal financial advice must have a credit license to do so.
ANZ is the smallest of the Big Four banks, all of which have paid-person programs to introduce clients to home loans.
But the problem was obvious: bribes were paid if the loans were successfully processed. There was no commission if they failed.
Kenneth Hayne’s Royal Banking Commission revealed how generous payments prompted dubious operators – including a jailed NAB staff member – to forge documents and pay cash bribes to gain approval of the loans so that the commission is paid.
In a statement, ANZ said the civil charges involved three unlicensed third parties who provided mortgage application documents to ANZ lenders.
“ANZ has cooperated with ASIC during its investigation and has implemented a customer remediation program as well as continuous improvement of its home loan processes and controls,” the bank said in a statement.
Home loans are the key to the profitability of Australian banks. ANZ’s annual profit soared 72 percent to $ 6.1 billion in the past year.
The bank’s chief executive, Shayne Elliott, said part of that growth was due to the growth in home loans during the COVID real estate boom.
ASIC Vice-President Sarah Court outlined the regulator’s concerns.
Ms Court said that if banks are accepting referrals from consumers seeking a home loan from people who do not have a credit license, but who receive commission payments for the referrals, “they need to make sure they have the right systems in place to properly deal with “these requests.
ASIC is asking for declarations, “monetary penalties” – a fine as a penalty – and other orders, including that ANZ must hire an independent expert to review ANZ’s mortgage client referral system.
The proceedings will be heard at a later date, set by the court.
ASIC took the NAB to court over similar issues in 2019, with a fine of up to $ 500 million in prospect.
The case ended last year and NAB was fined $ 15 million for violating national consumer credit protection laws relating to its “Introducer” program.
The NAB shut down the program, and a senior bank executive grilled for days at the Royal Banking Commission over the program successfully led the banking industry to delay the introduction of the solutions recommended by the Hayne Inquiry.
ANZ’s program remains open but with tighter controls than before.