ASIC has imposed conditions on a national finance brokerage’s Australian Credit Licence (ACL) following an investigation into suspected loan fraud.
Conditions have been imposed on the ACL of United Financial Services (UFS), a finance brokerage specialising in arranging loans for motor vehicles, following an investigation by ASIC into suspected loan fraud. The investigation concerned secured car loans submitted by UFS, totalling more than $7.8 million in the 18 months prior to November 2014.
According to ASIC, the suspected fraud involved a used car dealership in the Sydney area using false payslips that overstated consumers' income when providing documents to UFS when it was arranging credit for the consumer.
The false payslips were then submitted by UFS with applications for car finance to ANZ.
ASIC was concerned that UFS was not complying with its obligations as an Australian credit licensee under the National Consumer Credit Protection Act 2009 to make reasonable inquiries about a consumer’s financial situation, and to verify matters such as their income and expenses.
ASIC was concerned that UFS failed to have adequate risk management systems in place to detect the fraud in a timely and effective manner, with this failure meaning the submission of loans with false documents continued undetected by UFS for over 18 months.
The corporate regulator acknowledges the co-operation of UFS in its investigation.
“Brokers and lenders should be alive to the risk of fraud, and verification processes should be designed to ensure that fraud can be detected in a timely manner,” ASIC deputy chairman Peter Kell said.
“Brokers and lenders will not meet their responsible lending obligations by using unreliable verification processes,” he said.
The licence conditions will require UFS to appoint an independent consultant to review its arrangements to comply with its general conduct obligations under the National Consumer Credit Protection Act 2009, specifically its procedures for monitoring and supervision of UFS representatives and verifying the financial situation of the consumer.
The independent compliance consultant will report to ASIC and UFS will be required to address any deficiencies identified by its review.
ASIC’s investigation into the suspected fraud is continuing.
UFS is a credit services business, specialising in the delivery of consumer and commercial finance, including car and personal loans, and insurance products.
[Related: ASIC suspends lender's credit licence]