Former NAB branch manager pleads guilty to fraud

According to an ASIC investigation, between 23 October 2013 and 19 September 2015, Mr Alwan dishonestly made false and misleading statements to NAB in relation to 24 mortgage applications.

Mr Alwan, who was permanently banned from engaging in credit activities and providing financial services last year, told the bank that a NAB introducer had referred the 24 borrowers under the loan applications to NAB when he knew that this was not true.

The NAB introducer he claimed had assisted in the loan application was Mr Alwan’s uncle, operating under the business name Suit Club.

As a result, NAB paid Suit Club $56,995 in commissions.

The sentencing will take place on 1 October 2019.

While NAB has been operating a “spot and refer” introducer program since 2000 (which reportedly generated $24 billion dollars’ worth of loans between 2013 and 2016 alone), it announced in March of this year that it would be terminating the program as of 1 October this year.

The decision follows on from NAB overhauling its introducer program last year, when it reduced its introducer network from 8,000 to just over 1,000. NAB last year also ceased accepting referrals from introducers who operate outside the professional services industries.

This came after NAB reported to ASIC that it had uncovered several of its bankers, including Mr Alwan, were engaged in fraudulent misconduct in Greater Western Sydney.

Introducer fraud highlighted at the royal commission

This misconduct was later featured in the first case study before the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The role of introducers in mortgage lending was referred to repeatedly over the royal commission, as it looked at intermediated relationships and its impact on lending.

According to ASIC’s 2017 Review of Mortgage Broker Remuneration (Report 516), an introducer or referrer is an individual or business that provides leads to lenders or brokers.

Indeed, ASIC has previously stated that the number of referrals being made to lenders, either by the referrer directly or through a referrer aggregator, had increased significantly. The remuneration review outlined that the total number of home loans sold after a referral increased from 8,124 in 2012 to 26,106 in 2015, representing an increase in value from $3.3 billion to $14.6 billion. 

ASIC added that some of the most common referrers are real estate agents, migration agents, financial planners and other professional services referrers. However, referrers can also include many other types of individuals and businesses, including property developers and non-profit organisations. However, the royal commission hearings also heard cases of introducers being gym owners.

Under the law, introducers must comply with certain requirements, including that they do no more than refer the potential borrower to the lender and facilitate the borrower making contact with the lender.

In his final report, commissioner Kenneth Hayne noted: “Introducers have an obligation to disclose to a potential borrower any benefits, including commissions, that the introducer may receive for the referral. The effect of the current regime is that introducers are not permitted to be involved in the credit application or assessment process.

“Introducers must only act within the confines of their prescribed role. Entities must have systems in place to ensure that introducers do not exceed this role. And entities should not regard the role of the introducer as modifying their own responsible lending obligations.

“If introducers and entities behave in this way, introducer programs are not incompatible with responsible lending obligations.”

[Related: Major bank to end introducer payments]