Whistle-blower protections for brokers who reveal bank indiscretions are essential for “self-survival”, a Melbourne-based broker has said.
Geoff Wood of My First Property Finance told The Adviser that anyone asking whether bank indiscretions had occurred would be “blown off” their feet by responses from the broker market, but added that brokers may be reticent to “put their hand up” and identify problematic behaviour.
He said: “Working in the industry, there's a bit of a self-survival situation where you can't afford to put your hand up because — what will happen? You'll get blown off the panel of the bank and you'll never see them again, so until there's any sort of whistle-blower protection, no one's going to come forward.”
Responding to an announcement made by the Australian Securities and Investments Commission (ASIC) that it would be paying “particular attention” to the way in which lenders assess broker-introduced mortgages, Mr Wood said that any industry should welcome scrutiny.
However, he added that ASIC was “probably deflecting the focus from something they’re not doing to something they can do”.
He explained: “They're now scrutinising brokers for fraudulent activity. Well, go knock yourself out, go look for it, fine. I don't have a problem and neither do the majority of brokers because we're doing things properly and we're in compliance.”
Mr Wood also asked: “The bigger picture should be why they don’t review the bank practices?” He suggested that it’s because banks “hide” fraudulent or risky behaviour.
“When you think that with the scandals that have happened with CBA and financial planning, that ASIC can't even nail them to the wall, what hope have they got to review internally these lending practices? Even then, there's no requirement for the banks to disclose fraudulent lending practices to ASIC.”
Discretional branch lending is also an issue, according to Mr Wood, who said that he’s experienced clients of his being granted personal loans by local branches that would not have passed serviceability tests mandated by the bank. “Where’s the accountability? Where’s the auditing? They don’t disclose it; it only comes to light when the customer has got problems [and when] people start to get nervous.”
He said that that’s an area that ASIC should focus on. “You’ve got to ask the right questions to get the right answers.”
[Related: ASIC to scrutinise broker mortgages]
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