NOTES TO INTRODUCTION TO PARLIAMENT by Denise Brailey 20th February 2014


Regulatory neglect has caused financial losses for ordinary citizens from a recorded $1.5 billion in 2001, to $80 billion by 2007 and today, those figures have risen yet again.


In 2013 The Chairman asked that I meet with his Commissioner. I advised the lawyer I was preparing to lightly redact some copies of 2000 emails I had received. The internal emails were written by Bank Officers known as BDM’s, and sent to all brokers. BDM’s were offering to write up applications to save time. I prepared 200 for ASIC and presented them to the Commissioner.


There are six emails and letter of instructions between ASIC and me. ASIC main focus was stated as “the emails” not the Loan Application Forms. ASIC had many copies of LAFs. I had loaded many of the LAFs onto my website and ASIC already had over 80 copies from the 150 complaints they had received from BFCSA members re fraud and forgery pre July 2012. . The evidence I had spoken of to the Senate was of the 2000 emails from Banks to Broker Channel. ASIC is playing games. I delivered the bank emails to ASIC as instructed by their own lawyer.


ASIC is saying the SERVICE CALCULATOR is just a mere guide. This is simple misleading the Parliament. As the emails from Banks to Brokers state: “you must attach the Service Calculator to the LAF, or we will not process your deal.” All Lenders are saying to Brokers they must use the service calculator and the worksheet and attach to the LAF.


The Financial Ombudsman’s Service


FOS reports a raft of systemic issues regarding Low Docs. ASIC do not advise Parliament. There has been a mounting set of key indicators to suggest foul play in the banking sector since the initial 2003 Low Doc report, commissioned by ASIC and written by Karen Cox.


There have been six cases won in the courts - Consumer’s vs Lenders. Judges have found the Broker to be the Agent of the Lender. FOS has a duty to follow the lead of the courts and stands accused of cherry-picking arguments that favour the Banks, evidenced by recent Determinations.


Currently, FOS is taking advice from a “banking expert” who is seconded to FOS from Major Lender and has permitted access to files as we understand. This is unacceptable.


Recently, we came across the hidden PILOT PROGRAM, FOS had launched in July2013 to the benefit of the Lenders and the detriment of Consumers.


FOS is also asking trick questions including: “Did you sign a Blank Form?” This question can be asked two ways and arrive at two different answers. Why? Most people only ever saw three pages of the LAF. Brokers I have spoken to state: “very few would ever sign a blank form, maybe 1%...... BDM’s told us that.” The question is to evoke a wrong answer


In their PILOT Program, FOS has skipped the process of RECOMMENDATION and axed the Panel of Review. Instead, victims of bank fraud are being given a “take it or leave it” document known as the Ombudsman’s Determination and there is no right of appeal, nor any right to respond to legal arguments, biased to the Lenders. This is despite the initial letter relating to Terms of Reference to the customer, stating that first step is investigation and then recommendation.


The complainant has then 30 days to take the offer given, or file CLOSED. Bankers move in with writs. These FOS letters suggest: “YES we have found Maladministration in Lending, so we offer you a $5000 reduction in mortgage.” The 75% reductions in mortgage loans for similar cases have recently been abandoned due to the escalation in complaints.


This is no way to deal with serious cases of criminal offences being committed on older persons. It’s a new trend emerging in the mishandling complaints and of great concern to BFCSA. FOS’ new attitude demonstrates that FOS can no longer be trusted or believed and is delivering highly questionable decisions. Lenders pay around $5000 per case to FOS.


FOS initially used their powers in 2009 to demand discovery of documents from Lenders. Now FOS refuses to assist with demanding documents. Lenders say “documents are missing and ASIC accepts that.” Lenders win again. Yet FOS states in letters that complainants must make all their files and current financial details available to the Lenders, and failure to provide the SOFP will mean closure of file.


Instead of meaningful discovery and proper investigations of cases with allegations of fraud, consumers are constantly being threatened by closure of file.


FOS has become unworkable in our collective experience. Clearly, the people’s experience gives them no confidence in ASIC’s perception of that which constitutes a fair and equitable system of justice.




The gate-keeper policy is simply not working. Either Banks have no limits set on these types of loans, with zero limits on compensation claims, or the compensatory limits are in line with the limits on lending on high risk products.


The SERVICE CALCULATOR is the Lender’s secret weapon. I discussed this in detail with ASIC in Feb 2013. The Service Calculator form printed out by Broker or Bank staff “must be attached to LAF, or we will not process your deal.” This wording is contained in evidence provided to the Commissioner. The clients are signing to say they have seen and read and understood everything, yet the clients are only being presented at point of signing with 3 pages and not 11 pages as a complete LAF document.


FOS, COSL and ASIC jointly refuses to assist consumers in recovering these vital documents. We have managed to procure a number of one page service calculator printouts and work sheets that state “MUST NOT BE SHOWN TO BORROWER.”


It is the SERVICE CALCULATOR that is tampering with income figures after the LAF 3 page version has been presented and signed. The mere existence of this document shows a profound willingness by bankers to deceive their customers, otherwise why prevent them from seeing these documents and obtaining copies?


“Yes the Lender Executives are the Engineers, no doubt about it.”




All cases funded and won by clients to date were won with arguments used from the significant protections in the “old laws” - pre 2010 and still in existence, including the ASIC Act. One Senator stated: “ASIC has plenty of powers:” The new laws intentionally create a false impression that the old laws could not save the previous batch of bank victims from financial ruin. Not true, as evidenced by decisions and precedents set in the High Court and Appeal Courts. ASIC’s intention: to throw all legitimate complaints into the regulatory bin.


ASIC‘s appalling failure to identify any of the key indicators that BFCSA has brought to the attention of Parliament since 1998 is the very reason for this Inquiry being established.


The thirty year INTEREST ONLY mortgages are a ticking time-bomb and can only end in grief for decent Australians.


ASIC failed on all tasks relating to the initial list of scams, failed on all level of financial products and services and failed to find any evidence of foul play by Major Lenders. Yet behind closed doors they admit they have been “monitoring” most of the details provided by RECA and BFCSA since 1998.