There are increasing calls from the broking industry to utilise tax return data from the ATO in the open banking regime to reduce the risk of home loan fraud.
Finance industry associations, including the Mortgage and Finance Association of Australia (MFAA), have written to the federal Treasurer Jim Chalmers calling on the government to expand the Consumer Data Right (CDR) to include secure, consent-based access to ATO-held notices of assessment (NOAs) and income tax return information, as well as ASIC company registry data to reduce the risk of mortgage fraud.
The calls come in an open letter penned by the Australian Banking Association (ABA) – and co-signed by other finance associations, including the MFAA, the Customer Owned Banking Association (COBA), the Australian Finance Industry Association (AFIA), and FinTech Australia – following mounting concerns relating to potential multibillion-dollar fraud in the home loan market.
Indeed, the financial services regulator last month confirmed it is “making compliance inquiries” with Australia’s largest lender after the major bank self-reported to regulators and the authorities that it may have been a victim of mortgage fraud. Several other banks are believed to have been victims to similar home loan fraud.
The concerns appear to be focused on money laundering – whereby criminals may be ‘washing’ money obtained through illegal means (for example, drug dealing, prostitution rackets, or modern slavery) by obtaining loans using doctored documents – in some cases, created by artificial intelligence (AI).
The finance industry bodies have said that if lenders are able to draw on central “points of truth” – for example, by expanding the CDR regime to incorporate income data from ATO tax returns or ASIC company registry data – lenders would be able to more effectively verify borrower information and combat the rising threat of AI-generated fraudulent documents.
The letter, seen by The Adviser, reads: “Enabling access to ATO data through the CDR is a budget-neutral measure that would support productivity in the financial services sector, ease obligations placed on consumers, and improve Australians’ access to credit.
“In addition... we wish to draw your attention to the criticality of a single, authoritative source of income data as the most effective way to address the reported number of potentially fraudulent loan applications affecting the lending system. We also urge Government to separately enable structured access to ASIC company registry data, which would further strengthen financial institutions’ ability to identify and manage fraud risks.”
The groups noted that AI-driven documentation fraud is rapidly amplifying income misrepresentation and could be enabling crime syndicates to fraudulently obtain loans to launder and recycle overseas funds into Australian property and business assets.
They said: “With the exponential increase in public access to, and adoption of AI and related technologies, current manual income verification processes are under growing pressure. Reliance on customer-supplied payslips, Pay as you go (PAYG) summaries, and bank statements is not only slow and costly, but increasingly vulnerable to manipulation...
“While our industries continue to invest significant technological and human resources to prevent this kind of fraud, it will be increasingly challenging for manual controls to keep pace with the speed and scale of AI-enabled manipulation. An alternative approach that reflects the rapidly changing technological environment is therefore urgently required. Secure, consent-based access to ATO-held income information would provide a robust central point of truth, significantly improving the integrity of lending decisions.”
Further, the groups are urging the government to provide better access to structured ASIC registry data to help financial institutions more effectively identify fraud, complex ownership structures, and suspicious corporate changes. Improved access would replace current inefficient, incomplete, and outdated data collection methods, ultimately strengthening investigative efforts and credit decisioning across the industry, they said in the letter.
As such, the associations are urging government to:
- Commit to enabling ATO income data sharing through the CDR.
- Improve access to ASIC company registry data.
- Establish clear implementation pathways, including necessary legislative and regulatory changes.
- Work closely with industry to design models that are secure, consent-driven, operationally efficient, and maintain trust.
Brokers – who frequently utilise open banking data under the Consumer Data Right’s trusted adviser model – have also voiced support for including ATO data in the open banking regime.
Speaking to The Adviser, Mortgage Choice broker Deslie Taylor stated she thought an ATO portal linked into the open banking system would be “a positive step for the broader finance sector”.
“From where I sit, the integration would bring some much-needed clarity and consistency, particularly around compliance. Having more reliable, real-time access to financial data should reduce duplication and make reporting obligations more straightforward, which is something both businesses, brokers and lenders would benefit from. It also helps take some of the ambiguity out of the process, which is often where issues arise,” she said.
However, the Mortgage Choice Ormeau principal added that execution would be key, “especially around data security and how practical it is to use day to day. But in principle, I think it’s a sensible move and worth progressing”, she said.
Similarly, Aussie Forest Lake broker Kit Johnson outlined that he would save hours a week on chasing borrowers if income data were pulled from open banking, rather than relying on payslips.
Open banking’s long road
Open banking has been hailed as a solution to improving the home loan process for years, with a growing chorus of players asking for ATO data to be included to improve access to credit and streamline lending processes.
For example, submissions to the federal government’s five pillars of productivity inquiries last year indicated that incorporating relevant government data could materially enhance the productivity benefits of the CDR. In particular, the MFAA pointed to Australian Tax Office data as a potential inclusion that could improve mortgage lending. However, this would likely require changes to the Privacy Act, which has strict secrecy laws to protect taxpayer information.
Moreover, last month, NextGen’s new Australian Lending Technology 2026 white paper found that lenders are racing to replace manual document checks with open banking data feeds, as concerns over forged income documents and AI‑driven scams sharpen the focus on mortgage fraud.
The white paper outlined that this can have profound implications for both speed and integrity in mortgage decisioning, due to the fact that it considerably reduces the scope for falsified or doctored documents to slip through.
By plugging these data streams into credit workflows, lenders could cross-check declared income and expenses against verified transaction histories and account behaviour.
According to the report, lenders view this as a way to strengthen responsible lending, with faster approvals (63 per cent), streamlined refinancing and switching (53 per cent), and even more tailored product recommendations (20 per cent) flowing from the same data foundations.
Indeed, lending technology fintech NextGen is working on integrating open banking and fraud analytics to create a “direct chain of trust” by pulling transaction data directly from financial institutions into lodgement system ApplyOnline.
This shift aims to replace easily manipulated, second-hand documents with verified data, allowing brokers to use AI to accurately identify income and suspicious activity with greater security.
But lenders have been slow to adopt open banking data into the mortgage process. Live sharing of consumer banking data started in 2020 with the major banks and has progressively rolled out to other parts of the lending system over the past six years.
However, the regime has been beset by data quality issues – with open banking fintechs having identified repeated issues with the quality of home loan Product Reference Data (PRD) being provided – including incorrect interest rates, fees and charges, and the eligibility criteria for banking products.
[Related: Open banking pitched as antidote to AI-fuelled loan 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.
