Previously, Queensland’s brokers and banks could rely on 100 points of identification from borrowers when verifying their identity.
However, the new rules, which came into effect on March 1, now require a face-to-face interview with the borrower, who must also produce original documentation of all forms of identity.
“These are changes that affect mortgage brokers and lenders,” Lawlab’s legal director, Richie Muir, told The Adviser. “Banks and brokers will have to change their process in Queensland...” he said.
“Gone are the days when you could scan your passport or driver's licence and flick it through to your broker. Clients will now have to bring them in in person.”
Mr Muir said the new VOI standard, which was introduced in Victoria and NSW last year, will be “quite onerous” for brokers and they can outsource the work.
“You can outsource the VOI requirement to other agents such as Australia Post,” he said.
“Our technology partner Rundl will soon have a VOI solution as well. They are currently programming the integrated VOI solution within our system. So the whole process of contract exchange will be done through Rundl.”
The new VOI requirements come after an alarming rise in credit application fraud in recent years.
“Mortgage identify fraud costs the industry millions of dollars a year and it is on the rise,” Mr Muir said.
The Veda 2015 CyberFraud Report, released in October last year, revealed the scale of cybercrime and credit application fraud in Australia.
The report found that 50 per cent of credit application fraud occurs online, an increase of 33 per cent compared to the 2014 financial year, 21 per cent in the broker channel, followed by bank branches at 11 per cent and lenders at 7 per cent.
Overall, credit application fraud has risen by almost 13 per cent in the 2015 financial year across four main fraud types – falsifying personal details (accounting for 58 per cent), identity takeover (22 per cent), undisclosed debt (9 per cent) and fabricated identity (8 per cent).