The royal commission has further interrogated Aussie Home Loans over broker misconduct, this time placing commissions under the spotlight.
Appearing before the commission on Friday (16 March), Aussie Home Loans’ chief financial officer, Giles Boddy, was grilled over alleged misconduct involving brokers who received commissions for their personal home loan applications.
The commission alleged that brokers were “pretending” to be their own clients.
In response, Mr Boddy said: “They’re buying a house, processing their own home loan through a lender and then, because they’re a broker, they’re getting a trail commission on that, so effectively a discount.”
Broker receipt of trail commission also came into question, with both Commissioner Kenneth Hayne and council assisting Eloise Dias expressing concern over the passing on of costs to borrowers.
“The commissions that are being paid by lenders to brokers are passed on to the borrowers; the banks pass those costs on,” Ms Dias contended.
Mr Boddy agreed, but he stated that brokers warrant the payment of trail because of their continued servicing of clients.
Aussie fraud response slammed
On Friday, the commission continued its questioning of Aussie Home Loans general manager of people and culture Lynda Harris regarding the brokerage’s failure to adequately detect and report the misconduct of its contracted brokers.
Ms Harris was questioned over Aussie’s decision not to inform clients of fraudulent activity of four brokers and its failure to detect the fraud in all but one of the cases.
“Is it open for me to conclude, from what you’ve told me, it remains Aussie’s view that it is for the lender, and not Aussie, to investigate and determine whether there is fraud in one or more transactions?” Commissioner Hayne said.
Ms Harris claimed that, at the time that the fraud took place, the brokerage did not have the resources to adequately investigate the misconduct.
“We are reliant on lenders to provide that expertise,” Mr Harris said.
[Related: Royal commission unveils Aussie broker fraud]
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