The general counsel for a major aggregator has warned that brokers need to be “drilling down” on paperwork, as the “tragic” reality is that fraudulent loan applications can have a longer lasting impact on brokers than bank staff.
Speaking to The Adviser after NAB announced that it had fired 20 employees, disciplined 32 people and begun remediation for more than 2,300 customers after identifying that their mortgage may have been submitted “without accurate customer information and/or documentation”, Connective’s group legal counsel Daniel Oh highlighted why brokers need to be looking at documentation through an “investigative filter”.
Mr Oh explained: “Brokers are on the front line. They are meeting the consumer, they can read the body language and can read the bank statements, see the living expenses and payslips. But they cannot accept those documents at face value. They need to really look at those and study them, and if something doesn’t look right, ask questions.”
He continued: “Brokers cannot be afraid to ask the hard questions and kick the tyres. We do want them to start thinking about these things when they collect the information or when they have those conversations. We just can’t have brokers accepting the paperwork at face value. They need to get the evidence and look at it and overlay an investigative filter on all the information they receive and make sure that it all looks genuine and they are happy to put their name and reputation behind the loan application.
“Because the tragic thing is that, if something is fraudulent, and it’s difficult to prove who is responsible, it is [the] broker’s livelihood [that is] at risk. A branch staff member may get fired, but they can most likely get a job at another organisation and there is a salary there. A broker who can’t get a clean separation letter (that states there have been no adverse circumstances), that impacts their livelihood. And they would struggle to get with a another aggregator or remain in the industry. So, it is future-proofing their livelihood, and that is key, because we need brokers in the market.”
While Mr Oh said that the consumers should be subject to the same standards and levels of service regardless of whichever distribution channel they choose to go to, he stated that brokers can “lead the way on preventing mortgage fraud”.
He said that key to this was detailed record keeping: “I genuinely believe that the greater majority of brokers all want to do the right thing and are trying to do the right thing. But I think that the issues come down to a lack of documentary evidence. A lot of it is just record keeping and making sure brokers take accurate notes, etc., to indicate that they have done their diligence.”
He continued: “Often, admin is at the bottom of the pile for a broker, because brokers have so much to do. So, one of our focuses at the moment is on creating systems and methods that force the brokers to record their analysis and record-keep, without increasing that administrative burden.
“So, at Connective, our focus is really working on ensuring that our backyard is clean and that we run a hygienic business and our practices stand up for scrutiny. We are doing as much investment in training and education now to make life easier for brokers, and for us, in the future, when we will have to take more responsibility for the behaviour and performance of our brokers.
“If we can give brokers these tools and train them now, then maybe they can provide the first line of defence against fraudulent activity in the future.”
Last week, Connective released an update to brokers that listed the details that should appear on a payslip, which are as follows:
• Employer’s and employee’s names
• Employer’s Australian Business Number (if applicable; verify by looking it up online)
• Pay period
• Date of payment
• Gross and net pay
• Hourly rates and amount paid
• Any allowances or bonuses
• Superannuation deductions
• Any other deductions (such as child support payments, HECS payments)
• Leave balances
• A year to date summary
“If you are in any doubt, it is a good idea to ask your customer’s permission to call their employer and verify the information in their payslip,” Connective said. “If they refuse to give you permission, this can be considered a red flag.”
Annie Kane is the editor of The Adviser magazine, Australia’s leading magazine for mortgage brokers. As well as writing news and features on the Australian mortgage market, financial regulation, fintechs and the wider lending market – Annie is also the host of the Elite Broker podcast and regulator contributor to the Mortgage Business Uncut podcast.
Before joining The Adviser team at Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.
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