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Brokers the ‘first line of defence’ for application accuracy

by Hannah Dowling7 minute read
Brad Crinion

In a post-royal commission environment, brokers are labelled the “first line of defence” for financial application accuracy, and need to be wary of consequence management measures, according to Platform Finances head of compliance.

Speaking at the Asset Finance Broker’s conference, Brad Crinion, CEO of Platform Finance, stated the future of asset finance was bright, with greater opportunities for brokers working in the sector.

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“The outlook for the next 12 months and beyond looks very positive, particularly because of strong government spending,” Mr Crinion said.

“There are many opportunities being created by federal and state governments’ commitment to upgrading infrastructure in coming years. 


“This will create work for commercial contractors who need asset finance to grow.”

Mr Crinion also highlighted the growing importance of regulatory compliance for brokers in light of the post-royal commission environment, which was a key topic discussed at the conference.

“One message that came up time and time again was how brokers and lenders need to make consequence management more of a priority,” he said.

Steve Ritchie, head of compliance with Platform Finance and panellist on the discussion of compliance at the conference, said, “Consequence management measures are being more strictly applied now than ever.”

He emphasised that doing the wrong things now places a broker’s career at stake, with consequences for non-compliant and fraudulent behaviours more severe than ever.

“In years gone by, a broker may have received a ‘slap on the wrist’ for doing the wrong thing,” Mr Ritchie said.

“However, in the current regulatory environment, there is an expectation from the regulator that acts of non-compliance are dealt with accordingly and the consequences applied to a broker are much more severe.

“As an industry we need to do more. And while major banks and lenders are starting to do more in this space, brokers need to have greater awareness of their obligations, how to fulfil them and what the consequences could be for any inadvertent or deliberate breach of compliance. 

“That could include cancellation of accreditation, fines or industry bans.”

Mr Ritchie recounts the story of a broker whose accreditation was recently cancelled because of fraud. 

“The broker was under pressure to get a deal settled and when the lender requested changes be made to an accountant’s letter to facilitate settlement, the broker modified the letter himself and submitted it to the lender,” he said.

“When questioned by the lender, the broker blamed the customer for modifying the document. 

“The end result was that the broker’s employment was terminated, his lender accreditations were cancelled, and he was permanently banned by the aggregator.”

In light of such actions, Mr Ritchie highlighted the necessity for brokers to be more aware of their obligations, labelling them the “first line of defence” for financial application accuracy.

“Whereas sales teams used to be the force behind many lenders, in most instances now it’s the compliance, legal and risk teams that are ‘running’ the business,” Mr Ritchie said.

“However, brokers shouldn’t just assume any issues will be picked up by lenders; they need to change their mindset and understand they are the first line of defence and have an obligation and duty to themselves, their aggregator, the lender and the customer, to submit applications that contain accurate information reflective of the customer’s circumstances.”

“Further, brokers should keep detailed file notes of their conversations with customers and evidence to demonstrate certain disclosure requirements were met,” he added.

“In the absence of file notes and evidence, it becomes very difficult to prove to the likes of AFCA (in the case of a customer complaint) or ASIC that regulatory obligations have been fulfilled.”

Due to the nature of communication between broker and client, Mr Ritchie encourages brokers to go the extra mile to cover themselves.

“The broker world is an easier target because of their business models. The majority of their transactions occur over the phone or via email,” he said. 

“There’s a real need for brokers to exercise additional due diligence and not simply accept the information provided by the customer is accurate.”

Mr Ritchie encouraged brokers to pay particular attention to those documents most often doctored in the process of finance applications, including falsified pay slips, fake rates notices or utility bills, and fraudulent driver’s licences.

In light of the prevalence of these issues, Mr Crinion emphasised the work that the group is doing to assist their brokers, including producing e-learning modules, videos, lender training programs and tailored training sessions, as well as providing a monitoring and supervision program to help ensure regulatory obligations are met. 

Platform Finance has also launched a new system with automated compliance controls, according to Mr Crinion.

“We are really excited by this new asset finance CRM,” Mr Crinion said. 

“We’ll be revealing more in coming weeks but put simply, it will help revolutionise the way brokers manage and process applications daily.”

Mr Ritchie added: “We are trying to automate as much as possible and take compliance out of brokers’ hands.”

[Related: Lenders need to ‘get with the program’ on digitised variations]

Brokers the ‘first line of defence’ for application accuracy
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Hannah Dowling

Hannah Dowling


Hannah Dowling is a journalist for The Adviser and Mortgage Business.


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