Industry associations have outlined how the broking profession should confront surging mortgage-fraud headlines and steady borrower confidence.
Following a new wave of reporting on large‑scale mortgage fraud at the major banks and alleged broker involvement, the Mortgage & Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA) have sought to separate targeted misconduct allegations from the broader intermediary model and spell out how the profession should respond as borrowers digest the headlines.
MFAA executive of policy, Naveen Ahluwalia, said the recent allegations should not be allowed to morph into a blanket indictment of the sector.
“Reports relating to alleged loan fraud should not be seen as reflecting the mortgage and finance broking profession as a whole,” Ahluwalia said.
“Robust safeguards already exist across the lending ecosystem, with mortgage and finance brokers, lenders, aggregators, regulators and law enforcement each playing an important role in protecting consumers and maintaining the integrity of the financial system.
“Australians continue to place their trust in mortgage and finance brokers, with more than 81 per cent of new residential home loans now settled through a broker.”
FBAA CEO Leo Gagic said current headlines also created an opportunity for brokers to reinforce existing trust by drawing attention to the protections already in place.
“Brokers already enjoy a high degree of trust from their clients however should always take the opportunity of reinforcing that trust by pointing out how clients are protected,” Gagic said.
“Examples are highlighting their membership of a professional association like the FBAA and reassuring clients that they have the appropriate levels of insurance cover.
“If asked, brokers should also make it clear that like any industry, the percentage of people who do the wrong thing is tiny. In this case, while the dollar amount of the reported fraud is high, the brokers involved represent an extremely small percentage of the industry.”
Daily conduct, diligence on referrals under the microscope
With document‑forging and income misrepresentation now in the spotlight, the MFAA said that the current environment sharpened the focus on practices that defined professional broking.
“The expectations of mortgage and finance brokers have not changed. MFAA members are already required to meet rigorous professional, compliance and governance standards, and those standards are embedded in the way they engage with clients every day,” Ahluwalia said.
“In practice, that means clearly explaining documentation requirements, maintaining complete and accurate records, appropriately verifying information, and keeping comprehensive file notes throughout the lending process.”
Ahluwalia said that the heightened scrutiny provided an opportunity for brokers to lean into detailed explanations of their processes.
“Clients value transparency. Explaining why particular information is required, how the Best Interests Duty and responsible lending obligations shape the advice process, and the checks undertaken throughout an application helps clients understand the safeguards already built into the mortgage process,” she said.
Gagic said the allegations surfacing should be “deeply concerning” across the sector, particularly where fraudulent loan applications were introduced through external referrers.
He said that the current environment demanded a stricter lens on referral relationships.
“We must all carry out strong due diligence when accepting loans referred by third parties (accountants, real estate agents, etc) to ensure we know that party extremely well,” he said.
“If the information doesn’t seem to add up, question the source and motives, and if unsure, don’t accept the application.”
Working with banks on evolving fraud risks
On the question of how brokers should engage with banks and regulators as new detection tools are rolled out, Gagic urged brokers to participate in wider industry discussions about mitigation.
“Brokers should communicate with their aggregators and be part of the discussion around mitigating fraud, even participating in regular roundtables if the opportunity arises,” he said.
“In terms of communicating with clients, transparency and openness will increase the trust brokers currently have.”
Navigating headlines with clients
Ahluwalia said that the language now appearing in mainstream media reports risked sweeping compliant brokers into a broader narrative of distrust.
She said the focus in client conversations should be on calmly restating the profession’s role in a resilient lending system and demonstrating that daily conduct aligned with that role.
“Mortgage and finance brokers should continue doing what they do every day – maintaining high professional standards, meeting their regulatory obligations, and working collaboratively with lenders throughout the lending process,” she said.
Ahluwalia signalled support for enhancements to fraud‑prevention while warning against blunt instruments that could weigh disproportionately on law-abiding brokers.
“Where measures are introduced to strengthen fraud prevention or information sharing, they should be targeted, evidence‑based and support the integrity of the lending ecosystem without creating unnecessary burden for consumers or professional brokers,” she said.
Recentring the conversation on trust, value, and outcomes
Gagic said that reputational repair could not be treated as a one‑off exercise tied to a single scandal but as part of an ongoing discipline of demonstrating professionalism.
“Building trust never stops. Brokers should always be reinforcing their professional status through their association membership and highlighting any awards for quality service,” he said.
“Honesty and sincerity are paramount as every broker is an ambassador for our industry. Clients understand there are bad actors in every sector but will look past negative headlines when they have first-hand experience of the excellent service brokers provide.”
Ahluwalia said that the most effective response to suggestions of “guilt by association” was through a renewed emphasis on concrete examples from existing client relationships.
“The best examples are their own client relationships. Whether helping someone purchase their first home, refinance to reduce repayments or finance a small business,” she said.
“Those relationships are built on trust, professionalism and consistently acting in the client’s best interests.”
She linked that perspective to the sector’s record penetration of new lending flows and said that the current saga required brokers to be ready to articulate the sector’s reputational strengths more clearly to clients who were unsettled by the news cycle.
“Client confidence has been earned over many years through the professionalism and dedication of brokers across Australia,” Ahluwalia said.
“For professional brokers, the strongest demonstration of value is the quality of the advice they provide, the outcomes they achieve and the long‑term relationships they build with their clients.”
Mortgage fraud saga intensifies
Ongoing investigations by police, lenders, regulators, and representatives from across the entire financial services, legal, and property industries have revealed growing concerns relating to criminals using artificial intelligence (AI) to fraudulently obtain mortgages that may be ‘washing’ the proceeds of crime through money laundering.
The mortgage fraud issue first came to light in media reports at the beginning of the year after the Commonwealth Bank of Australia (CBA) self-reported itself to police and corporate regulators over potential mortgage fraud totalling about $1 billion, with the scale of the problem growing rapidly as more information is uncovered.
Over the weekend, The Australian Financial Review published a series of reports suggesting that the ongoing probe into mortgage fraud in Australia covers around $4 billion in home purchases across the nation’s largest banks.
On Saturday, National Australia Bank (NAB) said in a statement that it had referred “multiple parties” to the appropriate authorities and “has exited or suspended a number of parties from the bank”.
The Australian Transaction Reports and Analysis Centre (AUSTRAC) is working with major banks, law enforcement, and other regulators to map the extent of increasingly complex loan scams throughout the sector.
AUSTRAC CEO Brendan Thomas told The Adviser in March that the watchdog was assessing how widespread mortgage fraud had become, after revelations that a sophisticated syndicate may have secured billions of dollars of home loans using falsified documentation.
Investigations by authorities and the major banks – which include looking at current and former brokers at several aggregation groups – have already led to the termination of aggregator agreements and the quiet blacklisting of hundreds of brokers as lenders move to isolate the networks responsible.
Several arrests – including former bankers, brokers, lawyers, and accountants – have also been made.
[Related: NAB calls for National Economic Crime Strategy amid growing mortgage fraud]
Want to see more stories from trusted news sources?
Make The Adviser a preferred news source on Google.
Click here to add The Adviser as a preferred news source.
