Mortgage brokers sit on a goldmine for cybercriminals – and rising breach costs prove it
Mortgage brokers routinely work with some of the most sensitive personal and financial information a client can share. This includes identification documents, income details, bank statements, credit histories and loan application data, all of which are often stored digitally and transmitted between lenders and third-party platforms. From a cybercriminal’s perspective, this kind of information is highly valuable.
“Stolen data can be used for identity theft, fraudulent loan applications or sold for a profit on the dark web,” said Akshaye Kalkura, chief information security officer at BizCover (pictured). “This makes mortgage brokerages an appealing target for cybercriminals, regardless of whether it’s a large organisation or an independent sole trader.”
Common causes of data breaches in broking businesses
Large-scale cyberattacks often make headlines, but small- and medium-sized businesses are also at risk. In fact, according to the latest Annual Cyber Threat Report 2024-2025, large businesses continued to have the lowest number of reported cyberattack incidents, accounting for only 12% of reports from all businesses. On top of this, the average cost of a single data incident rose by 14% to $56,600 for small businesses. This cost has been steadily rising over the last three years.
The report also states that two of the top three most common self-reported types of cybercrime that impact Australian businesses are business email compromise (BEC) fraud resulting in financial loss (15%) and identity fraud (11%).
“To me, this indicates that human error remains one of the most common entry points for cybercriminals, with phishing emails, reused or weak passwords and accidental data sharing all posing ongoing risks,” observed Kalkura. “There are also reports that suggest identity theft via vishing (voice phishing) is on the rise.”
Remote and hybrid work
The shift toward remote and hybrid work has also expanded the digital perimeter of broking businesses. Staff accessing systems from home networks or personal devices can increase exposure if security controls are inconsistent.
Physical cyber risks
“Brokers can’t afford to overlook physical cyber risks, either,” said Kalkura. “Lost or stolen laptops, phones or USB drives containing client information can quickly escalate into a data breach if devices are not properly secured or encrypted.”
When all put together, these factors highlight why mortgage brokers cannot afford to become complacent when it comes to data breaches.
The consequences of a data breach
Direct financial costs
A data breach can carry immediate and often unexpected financial consequences for a mortgage brokerage. Once an incident is identified, businesses may need to engage IT specialists to investigate how the breach occurred, contain the issue and restore affected systems. In more serious cases, ransomware attacks can result in extortion demands or prolonged system outages.
Kalkura said: “Even if client data is not permanently lost, business interruption can still be costly. Especially for SMEs.”
Legal and regulatory implications
Brokers may also face legal and regulatory responsibilities following a data breach. Depending on the circumstances, there may be obligations to notify affected clients and, in some cases, relevant authorities. Managing these requirements can be complex and time-consuming, especially during an already stressful period.
There is also the risk of legal claims from clients whose personal or financial information has been compromised.
Reputational damage and loss of trust
While financial and legal impacts are often front of mind, reputational damage can be one of the most lasting consequences of a data breach – especially for a small business where client relationships are pivotal.
Minimise your cyber risk
While maintaining cybersecurity standards can seem complex, there are several straightforward and simple steps that mortgage brokers can take to significantly reduce their exposure, explained Kalkura.
“Basic cyber hygiene is one of the most effective defences against cyber risks,” he said.
This includes using strong, unique passwords, enabling multi-factor authentication where available, and keeping systems and software up to date.
Staff awareness is equally important. Regular reminders or training on how to spot phishing emails and suspicious links can help reduce the risk of human error.
Kalkura’s final tip is to “review who has access to client data and whether that access is still necessary. Limiting permissions and regularly checking security settings on third-party platforms can help close potential gaps before they become problems.”
Cyber Liability insurance can also help brokers recover quickly from a data breach if the worst should occur. Cyber Liability insurance covers losses from claims arising from data breaches, business interruption and remediation costs following an actual or threatened data breach, and some policies offer optional cover for cover for social engineering, phishing or cyber fraud.
For fast and easy online insurance quotes, visit BizCover.com.au.
This information is general only and does not take into account your objectives, financial situation or needs. It should not be relied upon as advice. As with any insurance, cover will be subject to the terms, conditions and exclusions contained in the policy wording or Product Disclosure Statement (available on our website). Please consider whether the advice is suitable for you before proceeding with any purchase. Target Market Determination document is also available (as applicable).
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This article was produced in partnership with BizCover
