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Cleaners and real estate agents getting kickbacks to drive home loan customers to ANZ has seen the bank dragged to court by the corporate watchdog.
Key points:
- ASIC is suing ANZ in relation to 74 loans that may have breached the National Credit Act
- The loans were referred to the bank by "introducers" — third-parties who were paid commissions for sending customers ANZ's way
- The banking royal commission heard evidence that some large-scale introducers were tailors or gym owners
ANZ's 'Introducer' program paid third parties a commission and helped the bank write more than 50,000 loans worth at least $18.5 billion over just five years.
But the Australian Securities and Investments Commission (ASIC) has today commenced civil proceedings in the Federal Court relating to 74 of those loan applications, with allegations including fraudulent documents and "facilitating unlicensed persons engaging in credit activities".
The issue is not the specific occupation of those who made the referrals, but that they were meant to be people with specific insight into customers finances such as accountants and financial planners.
People who give personal financial advice are required to have a credit licence to do so.
ANZ is the smallest of the so-called big four banks, all of which ran programs paying people to introduce customers interested in home loans.
But the problem was obvious: kickbacks were paid if the loans were successfully processed. There was no commission if they failed.
In a statement, ANZ said the civil charges related to three unlicensed third parties that provided home loan application documents to ANZ lenders.
"ANZ has co-operated with ASIC during its investigation and has established a customer remediation program as well as continuously improving its home loan processes and controls," the bank said in a statement.
Home loans are key to the profitability of Australian banks. ANZ's annual profit soared 72 per cent to $6.1 billion in the past financial year.
The bank's chief executive Shayne Elliott said some of that growth was due to growth in home loans during the COVID property boom.
ASIC action
ASIC deputy chair Sarah Court laid out the regulator's concerns.
Ms Court said if banks are going to accept referrals of consumers seeking a home loan from individuals who don't have a credit licence, but who are receiving commission payments for the referrals, "they need to make sure they have the right systems in place to properly process" those applications.
ASIC is seeking declarations, "pecuniary penalties" — a fine as punishment — and other orders, including that ANZ must hire an independent expert to review ANZ's home loan customer referral system.
The proceedings will be heard at a future date, determined by the court.
ASIC took NAB to court over similar issues in 2019, with a maximum fine of $500 million in the offing.
The case ended last year and NAB paid a $15 million fine for breaking National Consumer Credit Protection laws relating to its 'Introducer' program.
NAB has shut the program, and a senior bank executive grilled for days at the banking royal commission over the scheme led a successful push by the banking industry to delay bringing in solutions recommended by the Hayne inquiry.
ANZ's program remains open but with stricter checks than before.