Allegations have been levelled at a major aggregator regarding suspected loan fraud from some of its broker network.
Aggregation group Finsure has been implicated in allegations relating to suspected mortgage fraud, with The Australian Financial Review reporting that bankers have said ‘people within its network’ may be involved in fraudulent home loan applications.
In an opinion piece published on the Financial Review on Friday (10 April), associate editor Joyce Moullakis reported that the current probe being undertaken by lenders and regulators “has identified the involvement of bankers and mortgage brokers in the Chinese community, alongside money mules, and accountants… there are also suspected connections to Middle Eastern crime gangs”.
She said that two banks had told the column that “Finsure has had people within its network implicated in potential loan fraud”.
In a statement to The Adviser, Finsure CEO Simon Bednar noted that it had “not been directly contacted by any lenders or regulators regarding the current review being undertaken” and had no details on the allegations.
Speaking to The Adviser following the allegations put forward in the Financial Review article, Bednar added: “Unfortunately, there will always be misconduct in our industry. While perpetrated by a small number of bad actors, it’s sullying the entire industry.
“Speaking from our own experience, we take instances of misconduct very seriously and move quickly to remove these individuals from the network and industry.”
Finsure added that it had recently raised its entry requirements following concerns about misconduct in the broking space. Earlier this year, Finsure moved to require all new members to have a minimum of two years’ experience in loan assessment or direct customer conversations that assess credit requirements.
If they don’t, these brokers must complete Finsure’s Academy program, or they won’t be accepted by Finsure.
However, he added that Finsure believed there needed to be greater transparency and more effective information sharing between lenders, aggregators, and industry bodies, particularly if they are firing staff for suspected misconduct or have concerns that they may be cutting corners.
The CEO explained: “We can only work with the information we have on hand. For instance, we are not privy to information held by lenders on their staff, which could have assisted with our vetting of ex-employees wanting to become brokers.
“Disappointingly, these staff were given clean references, and we later found out some of these ex-employees to be among the bad actors hurting our industry.
“This isn’t limited to just Finsure and highlights the importance of key industry participants like banks to be more transparent and open to information sharing so we can stamp out these behaviours quickly and stop them from joining.”
Indeed, the broking industry has long been calling for stronger collaboration across the finance industry to ensure those who are terminated due to misconduct are identifiable.
While associations and aggregators have numerous checks to ensure that new entrants are fit and proper persons, and updated reference checking and information sharing protocol for financial advisers and mortgage brokers were brought in following the banking royal commission, there is little cross-sector checking.
The Mortgage & Finance Association of Australia (MFAA) noted that its membership checks are one layer of a broader system, alongside licensing, aggregator oversight, lender accreditation, and regulatory supervision, which form “a multi-layered framework designed to promote integrity”.
MFAA CEO Anja Pannek said mortgage fraud is a serious matter, but it’s not representative of the vast majority of participants in the lending ecosystem.
“It’s not a bank, broker or referrer only issue, it’s a whole-of-industry challenge that requires a co-ordinated response,” she told The Adviser.
“While this activity represents a small part of the market, it has outsized consequences. That’s why stronger collaboration and information sharing across brokers, aggregators, lenders and regulators is critical.”
The MFAA has established an introducer and referrer working group, bringing together major banks and aggregation groups to address fraud risks in this part of the system.
“We welcome broader collaboration across industry. We are already seeing the benefits of this approach,” Pannek continued.
The association also recently co-signed an open letter to federal Treasurer Jim Chalmers, suggesting the government should expand access to ATO data through the Consumer Data Right to “improve data integrity and reduce reliance on documents that may be susceptible to manipulation”.
[Related: AUSTRAC urges tougher checks as mortgage fraud probe widens]
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