Australia’s corporate regulator has sued ANZ over its controversial ‘introducer program’, alleging the bank breached the Credit Act by allowing unlicensed parties to funnel borrowers towards home loans they could not afford.
In a Friday morning announcement, the Australian Securities & Investments Commissions (ASIC) said it has commenced Federal Court action against the Big Four lender.
The allegations stem to back to an ANZ scheme which allowed individuals outside of the bank, including community group members and real estate representatives, to bridge the gap between prospective homebuyers and the lender.
In return, these ‘introducers’ received a commission from the bank once the mortgage was approved.
ASIC alleges that between 2016 and 2018, the bank accepted “customer information and documents from introducers and other unlicensed individuals when this was not allowed.”
In addition, the regulator claims the process may have exposed the lender to fraudulent documents, exposing borrowers to loans they otherwise would not have been eligible for.
ASIC also accuses ANZ of “failing to take reasonable steps” to ensure its representatives did not conduct business with “unlicensed third parties”.
In doing so, bank representatives, chasing their own sales targets, “had an interest in not highlighting non-compliance (and therefore a conflict of interest),” ASIC said in its filing.
“If banks are going to accept referrals of consumers seeking a home loan from unlicensed individuals, who receive commission payments for the referrals, they need to make sure they have the right systems in place to properly process those referrals,” ASIC deputy chair Sarah Court said.
ASIC said some 50,000 loans were processed through the program, with a value totalling $18.5 billion.
In its own statement, ANZ said it has cooperated with ASIC through its investigation, and has “established a customer remediation program as well as continuously improving its home loan processes and controls.”
“ANZ is considering the matters raised in the [filing] and will not be providing further comment given the matter is now before the courts.”
The ANZ legal action is not the first time ‘Introducer’ schemes have come under intense scrutiny.
In the final report of the baking royal commission, Commissioner Kenneth Hayne declared “introducers are more clearly the face of the lender than the borrower”, and that such schemes are no excuse for banks “modifying their own responsible lending obligations.”
Competitor NAB also felt the wrath of ASIC last year, when the Federal Court levelled a penalty of $15 million over the bank’s own introducer system.