How do aggregators track broker compliance?

For the industry’s largest players, compliance has shifted from a periodic check to an “always-on” monitoring environment.

LMG CEO and executive director Ewen Stafford confirmed the group uses a compliance operating model underpinned by data analytics to identify outliers in broker portfolios.

Key risk indicators now include quantitative document uploads, credit guide completion rates, word counts in recommendations, and game plan completion rates.

“Compliance at LMG is not reactive – it is built into how we operate, and is a condition of operating within our network. It includes upfront due diligence prior to onboarding, ongoing monitoring, mandatory training, and immediate action where issues arise,” Stafford told The Adviser.

“Our approach is structured and consistent, upfront accreditation and verification, ongoing monitoring, and clear escalation pathways where issues arise. This includes: where concerns are substantiated, we lodge a breach notice; engaging lenders and following established reporting processes with lenders and regulators including investigating the matter, taking appropriate action, and referring it where required. This approach reinforces adherence to the Best Interests Duty (BID) and Responsible Lending obligations across our network.

“LMG maintains our rigorous, zero-tolerance approach to fraudulent activity and can confirm that we proactively monitor our network using our compliance operating model underpinned by data analytics.”

Enhanced technology

Aggregators are increasingly fighting tech-enabled fraud with their own digital armoury. LMG, for example, is currently integrating “next-generation measures” to support compliance, including:

• AI-detection tools: The integration of advanced document forensics allows for the immediate identification of alterations in digital submissions (including AI-generated documentation).

• New in-built solutions in MyCRM: Within the next six months, the MyCRM platform will launch integrated fraud detection in My Documents.

• Direct-source verification: Transitioning toward open banking and direct data retrieval to minimise the risks associated with relying on applicant-provided documentation.

• Enhanced education: Updated training and personalised coaching sessions focused on identifying evolving fraud methodologies and compliance best practices.

Similarly, Specialist Finance Group (SFG) has moved to a digitally enhanced program leveraging AI to identify anomalies, focusing on the “chain of custody” for every document.

SFG general manager Blake Buchanan commented: “Over the past several years, we have significantly strengthened our audit and compliance framework through a digitally enhanced program that leverages AI-driven tools to identify anomalies, supported by rigorous investigation processes and strong reporting protocols to lenders and regulators.

“Within our network, a core requirement is that brokers must be able to clearly evidence the origin of all supporting documents. This includes direct verification from clients, employers, financial institutions, accountants etc, with appropriate audit trails.

“If the source of information cannot be substantiated, it is treated as a serious compliance concern,” he said and noted that lenders are moving to adopt open banking so they can source more data directly, reducing reliance on broker-supplied documentation.

SFG’s enforcement measures include:

• Mandatory evidence of origin for all supporting documents.

• Strict mentor oversight for new-to-industry brokers to prevent them from becoming “money mules” for nefarious actors.

• Rigid referrer due diligence, including police and credit checks for directors.

• ASIC reference checking that goes beyond minimum requirements to report adverse findings.

“Beyond compliance, we take an active leadership role in the industry by sharing our governance frameworks and best practices with industry bodies, including Mortgage & Finance Association of Australia, Finance Brokers Association of Australia, and other related bodies and regulators,” Buchanan said.

“Our objective is to help lift standards across the broader market and reduce the likelihood of similar incidents occurring elsewhere that would otherwise give brokers broadly a bad name.”

For ASX-listed aggregator Australian Finance Group (AFG), the compliance arsenal includes onboarding background checks, regular audits, and enhanced checks where risk indicators are present.

Action at AFG includes:

• Investigation and remediation for identified conduct issues.

• Firm consequences for policy breaches.

• Strict adherence to the ASIC Reference Checking Protocol since 2021.

AFG’s general manager for industry and partnerships, Mark Hewitt, emphasised that AFG “takes compliance with all laws and regulatory obligations extremely seriously, and it is fundamental to how we operate”.

“AFG works closely with lender partners and maintains established escalation and reporting processes on all issues affecting our network and the industry as a whole. We have a track record of raising issues of concern for the industry with our lending partners. We engage as appropriate with relevant Regulators and respond promptly to any requests for information,” Hewitt said.

He said that prevention and enforcement measures across the network include broker education and guidance, ongoing compliance monitoring, regular reviews and audits, enhanced checks where risk indicators are present, and firm consequences for breaches of its policies and standards.

“Where AFG identifies conduct that may be unlawful or inconsistent with our policies and standards we take appropriate action, which may include investigation, remediation, suspension and/or termination, and escalation to relevant parties, including regulators, where required,” Hewitt said.

“AFG continues to monitor emerging risks within the industry, including technology-enabled document manipulation, and we regularly review and strengthen our controls accordingly.”

Oversight at the major brokerages

Major brokerage brands, including Yellow Brick Road (YBR) and Aussie (part of Lendi Group), also conduct strict monitoring of broker activity to ensure compliance.

Lendi Group chief distribution officer Brad Cramb highlighted that as brokers operate under its single licence, it takes compliance – and any allegation of misconduct – seriously.

Lendi’s enforcement actions against misconduct include:

• Suspension and termination of accreditation.

• Remediation for affected customers.

• Co-operation with AUSTRAC and ASIC for early identification of suspicious activity.

Cramb said: “We expect all brokers operating under our group to comply with applicable laws, regulatory obligations and our internal standards. Beyond baseline compliance, we maintain policies, controls and monitoring designed to detect and respond to potential misconduct, including document manipulation regardless of how it is generated.

“Our approach is to assess each matter on its facts and act accordingly, with a focus on protecting customers and maintaining integrity across the network. Where issues arise, we act decisively, including suspending or terminating brokers and reporting to relevant parties, as appropriate.

“We also engage across the industry on emerging risks, including the use of AI and evolving document verification challenges, to help strengthen safeguards and reduce the risk of consumer harm.”

YBR – which recently appointed a new chief risk and compliance officer in the form of David Flynn – said its strategy involves rigorous onboarding, ongoing monitoring, and regular reviews to ensure poor practices are removed “as quickly as possible”.

Flynn said: “Every broker operating within the YBR network is subject to rigorous onboarding checks, ongoing monitoring, and regular compliance reviews. Where concerns are identified, they are acted on promptly and in line with regulatory and contractual expectations.

“Strengthening governance remains a priority for the business, reflected in our continued investment in compliance capability,” he added and noted his recent appointment.

Flynn told The Adviser that addressing fraud requires a unified front across the lending ecosystem. “Compliance is not aspirational; it is a fundamental condition of operating in this industry,” he said. “We support initiatives that strengthen document verification, improve data sharing, and close gaps that can be exploited, including the use of enhanced verification tools and broader access to reliable third‑party data sources.”

What’s next?

The push for real-time verification marks a pivotal turning point in an industry currently reeling from the fallout of the $3 billion “referral-led” scandal. While tech-enabled solutions like metadata analysis and pixel tracking offer a formidable defence against AI-manipulated payslips, industry leaders agree that technology is only half the battle.

As aggregators and lenders embrace further AI to mitigate fraud, alongside single-source-of-truth platforms, such as open banking, it is hoped that any potential fraud can be stamped out in real time, before it reaches lodgement.

[Related: Aggregators call for better data sharing]