by Amy Rosenfeld | 17 Dec 2013

AB News: 

Bank bashing culture unfair: Lending manager


 Australian Broker News is on the Ball.....just read the comments and visit their website.  Its about time Brokers and Borrowers realise they are on the same side and the Banks/Lenders are setting everyone up......everyone with a pulse and a house including the broker families.

A bank employee has hit back at the Australian "culture of bank bashing” following accusations ASIC is not doing enough to stamp out fraud in lending institutions.

 Last week, Australian Broker reported ASIC has vowed to crack down on fraudulent brokers, and is currently investigating 20 cases of mortgage fraud.

Many readers strongly supported the move from ASIC to take down the “rogues” in the industry, but highlighted an apparent disparity between ASIC’s stance regarding fraud in lending institutions compared to fraud in brokerages.

The lending manager, who wished to remain anonymous, told Australian Broker banks have become an easy target for brokers.

“I think Australia has a culture of bank bashing, we’re kind of like a favourite target – it’s politicians and bankers. Brokers have their own culture and will say ‘don’t deal with the bank, deal with us’, but at the end of the day the deals are coming from the banks.”

While the employee admits fraud does occur within banks, it is usually picked up through stringent internal compliance measures – not by ASIC.

“I guess [banks] are less of a target because [ASIC] assume there is internal checking. Obviously we do find people trying to do things like that and all we really do is boot them out straight away, whereas in the broker world when they’re self-employed and there are no compliance people over their shoulder all the time I guess the probability of getting caught is a lot lower, so that increases the incentive to actually try.”  bank employees are generally on salary, the “risk to reward ratio” of committing fraud makes it a highly unattractive prospect for most bankers, he said.

 But Garry Compton, general manager of Finance National, says there have been a multitude of instances in which he or other brokers have not approved finance for a client due to responsible lending requirements, only to have that client get approval straight from the bank.

“There’s something going on, I’ve been in this game for over 15 years so I certainly know how to calculate their capacity. I know the banks’ criteria – we hold the highest accreditation here with lenders.”

The lending manager, however, claims that human error is a common reason for loans being turned down both from brokers and from banks. Bank employees are able to ask for assistance up the chain of management to fix the problem, whereas brokers may find it easier to simply try another bank.

It is in banks’ best interest to self-regulate, he says, and generally by the time ASIC finds something is wrong, action has already been taken by the bank.

 Most action taken by ASIC has been due to red flags being raised by lenders, says Compton, but ASIC has limited power to be more proactive.

 “Really, at the end of the day, it’s going to continue unless the bank holds itself up to investigation - and they’ll have to go through every single file – it’s just too big an area and ASIC won’t take them on.”

An ASIC spokesperson responded that ASIC uses a number of different ways to identify and pursue instances of mortgage fraud.

ASIC undertakes a range of pro-active surveillances and will often commence enforcement action as a result of those surveillances. 

“Misconduct can be brought to ASIC's attention by industry, either directly or indirectly through suspicious matter reports, disciplinary action by industry associations or termination of lender accreditations.” 

ASIC is active across all sectors of the industry, said the regulator, however the phased introduction of responsible lending obligations meant credit assistance providers had to comply with these obligations six months before many lenders. 

“The sheer number of credit assistance providers will always place them on our radar.

“The National Credit Act provides the opportunity for industry to consolidate the professional profile of its members and raise its public perception, particularly in areas where previously there was limited regulation and consumer safeguards.

Those in the credit industry must be familiar with their obligations under the National Credit Act. They should know the law, read our guidance and seek additional advice if they feel they need it.”


L3nder on 17/12/2013 10:55:16 AM

Banks don't need to commit fraud. When the market heats up and property is on the rise, they simply create "a new product" with a great name like "1 day ABN" or "Low doc's" or "90/10 non genuine savings" and offer it to borrowers who previously could not pass good lending criteria.

The security property becomes the only lending criteria, until it all gets out of hand again and customers who really could not afford the payments start to default. Hundreds of properties go back on the market at the same time bringing the price down, then the banks and regulators hold "enquiries" as to why this happened, and of course realise it was those damn brokers again, submitting "dodgy" apps. Hang on...I'm getting a feeling of Deja Vu

NoExcuse on 17/12/2013 10:49:41 AM

Brokers have nowhere to hide when caught. No bank or aggregator will cover up for brokers (unless they are a top performer). These days the broker is burned at the stake to set an example. For a broker to risk their business, jail, reputation, their trail commission and broking license is just crazy.

There is no excuse. This is a real challenge for new brokers who sell back into their ethnic community or as an aggressive sales team and are under pressure to get loans approved no matter what.

John on 17/12/2013 10:39:51 AM

Pleaseeeeeeee, I have had customers tell me the lending managers in branch land has told them not to use a broker? So it is not a one way street in that space.

The problem with dealing with the branches, they don't give customer service, you don't deal with the person who facilitated their loan, no follow up. If a branch manager was worth his salt, he would have a relationship with the local broker in the area, instead of bagging them.

richard butler on 17/12/2013 10:23:36 AM

The lending manager, who wished to remain anonymous, yeh right !

what a lot of B.S. remain anonymous and make comments like that well all i have to say is talk to over 2000 developers who where kicked into the gutter by the banks during 2008 to 2012 i am not anonymous and willing to talk to anybody about the banks devaluing my assets by millions and making requirements for any construction loan during this time impossible to achieve by moving requirements monthly and destroying well meaning hard working Australian family's. My name is Richard Butler i am not anonymous nor am i being paid by a bank while i make this statement unlike Mr credit manager anonymous surely you would expect to get a reaction like this with a story like that i await more comments on Mr anonymous unbelievable naive comments when the post individual returns of earnings of 5 to 6 billion a year in the last 24 months.

Regional Broker on 17/12/2013 10:12:23 AM

This is smoke and Mirrors stuff , this so called employee/ lending manager is really giving no attention to the very clear examples of breaches of the NCCP being committed by Bank staff that have been reported by brokers in the comments, he /she is just pedalling a line from one of the banks . There is no instance of bank bashing been occurring . I for one hope they keep doing what they are doing it is just great for brokers as clients who were once loyal to the bank are now dealing with brokers. Evidenced by the upward trend of the market share being enjoyed by the brokers. Bank staff are clearly breaching the NCCP, yes they may be being kicked out BUT why with so many known apparent breaches by the banks ( responsible entity) are ASIC not making any apparent moves to look into the situation. The only answer can be the banks are so well protected by their legal teams.

Tony South Coast on 17/12/2013 9:27:23 AM

There are "rogues" amongst both lender staff and brokers -- but the broker "rogues" are reported to ASIC by the lenders and industry groups whilst those working for the lenders are dealt with internally and never reported to ASIC or, in fact, to anyone external to the lender. This is why you will always see more brokers being investigated by ASIC than bank staff -- not because brokers are more "corrupt".

mick on 17/12/2013 9:11:38 AM

CBA approved and settled a full doc 80% LVR equity release facility with tax returns showing inability to service debt for a self employed applicant. The applicant had a property sold by NAB as mortgagee in possession recently as well applicant was director of a company wound up by a liquidator.  I had the deal approved by a non conforming lender and would have had no chance of getting a prime lender look at the deal via the broker channel

Keith of the West on 17/12/2013 9:08:01 AM

I can see why the "employee" wants to remain unnamed! ~ his comments lack any credibility & substance. Bank employees' even on salary are still under pressure to reach sales target to trigger bonus payments and/or continuity of employment

Dave Robinson on 17/12/2013 9:05:55 AM

I understand where the banker is coming from but if you think the banks have "stringent internal compliance measures" you must be new to the job. Constantly see bank employees committing fraud over 7 and 10 year periods. We can keep pointing the figure as much as we like but at the end of the day fraud is fraud and it is in everyone's interest to stamp out this practise no matter who commits it.

Old Joe on 17/12/2013 9:03:01 AM

But didn't one guy make almost $500Million by bashing banks and then sell out to them in 20 years time. Do you really want us to feel sorry for you. You see I still struggle that banks whinge about brokers but love the deals arriving on the desk packaged up neatly and also paid less for deals now cause Brokers are all millionaires that who have deals that sail into the brokers lap while they are out playing golf all day. Sorry about my cynicism but go cry to your next line manager at your review and work out a way to get home quicker after 5pm while I refinance your loans.