The corporate regulator has initiated lawsuits against ANZ Bank after the lender allegedly used cleaning products, real estate agents and fraudulent documents to take out billions of dollars in home loans under a scheme that was heavily criticized in the Royal Banking Commission.
The Australian Securities and Investment Commission (ASIC) brought the case before the federal court on Thursday, alleging that ANZ Bank had violated corporate law by using unlicensed individuals to refer home loan applications to the bank for a commission.
ASIC claims that in the five years to June 2020, ANZ Bank used the illegal ‘introductory program’ to take out more than 50,000 loans worth more than $ 18.5 billion. In some cases, ASIC claims that these mortgages relied on fraudulent documents.
In September 2018, ASIC claims that the introductory program contributed to about 10 per cent of all home loans sold by ANZ’s branch network in Australia. ANZ Bank failed to take appropriate steps to train the referral agents and ensure that they did not collect documents from potential customers to whom they were not authorized, the regulator claims.
In its brief statement, ASIC claims that many of these issues were identified by ANZ’s internal audit team in September 2016, but despite measures put in place to address the issue, ongoing deficiencies were identified in June 2020.
ASIC Vice President Sarah Court said the regulator is concerned that some of these loans may have been granted on the basis of false information and that some consumers were taking on debts that they could not afford.
“If banks want to accept referrals from 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,” Ms. Court said.
ASIC seeks fines and other orders from ANZ Bank, including for the bank to engage an independent expert to review its existing mortgage customer referral schemes.