Bad actors risk harming reputation of mortgage broking industry, as Finsure brokers implicated in fraud activity
The home loan fraud scandal that kicked off when Commonwealth Bank self-reported itself to the police shows no signs of slowing down.
CBA first contacted authorities in late February due to suspected illicit behaviour “being attempted through mortgage broking and referral channels”. Initial estimates suggested the scale of the suspected fraud was around $1 billion.
At the time, AFR reported that CBA proactively referred itself to the police and the corporate watchdog after a major review of compliance practices and customer lending documents revealed swathes of potentially doctored applications, including AI-generated submissions.
Weeks later, when banking giants Westpac, ANZ, NAB and Macquarie reportedly began working with authorities to determine the extent of fraudulent home loans on their books, the suspected extent of the fraud doubled to $2 billion.
That figure is now suspected to have ballooned to $3 billion after Commonwealth Bank reportedly alerted nine other lenders to loan referrers it suspects are tied to fraudulent or irregular mortgages.
Brokers operating within the major aggregation group Finsure were implicated in the fraudulent activity. “The industry is always going to have its share of bad actors," Finsure chief executive Simon Bednar told the AFR. "Finsure acts as soon as there is any notification or any evidence of bad actors." He said banks "do need to do more in communicating with aggregators on reference checking".
The scandal has the potential to harm the reputation of the mortgage broking industry.
Mortgage and Finance Association of Australia (MFAA) chief executive Anja Pannek (pictured) believes mortgage fraud is a serious matter but it’s not representative of the vast majority of participants in the lending ecosystem.
“It’s not a bank, broker or referrer only issue, it’s a whole-of-industry challenge that requires a coordinated response,” Pannek said in comments sent to MPA.
“While this activity represents a small part of the market, it has outsized consequences. That’s why stronger collaboration and information sharing across brokers, aggregators, lenders and regulators is critical.”
Pannek said the MFAA has established an introducer and referrer working group, bringing together major banks and aggregation groups to address fraud risks in this part of the system.
Today, there are more than 22,000 mortgage brokers operating in Australia – one of the highest concentrations of brokers in the world.
They account for nearly 80% of new home home volumes, and are increasingly being entrusted by first-home buyers to guide them though the biggest financial decision of their lives.
“We welcome broader collaboration across industry. We are already seeing the benefits of this approach. The MFAA has worked alongside the Australian Banking Association and other bodies on joint advocacy, including calls to expand access to ATO data through the Consumer Data Right.
“This will improve data integrity and reduce reliance on documents that may be susceptible to manipulation.”
Pannek added that MFAA membership checks are one layer of a broader system. “They sit alongside licensing, aggregator oversight, lender accreditation and regulatory.”
