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Under a new lawsuit against ANZ, ASIC has sought a probe into the major bank’s current home loan customer referral arrangements.
ASIC commenced proceedings in the Federal Court against ANZ last week, claiming referrals through the bank’s home loan introducer program and from unlicensed individuals had breached the Credit Act.
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The program had involved home loan referrals to ANZ from third-party introducers from various professions, such as cleaners and real estate representatives. The introducer received a commission if the home loan was granted.
ASIC has alleged that between June 2016 and March 2018, ANZ breached consumer protection credit laws by accepting customer information and documents from introducers and other unlicensed individuals when this was not allowed.
ASIC has also claimed some of the documents provided were fraudulent.
From 2015 to June 2020, more than 50,000 loans were referred to ANZ through the introducer program, resulting in lending of more than $18.5 billion.
In September 2018, the introducer program contributed to approximately 10 per cent of all home loans sold by ANZ’s branch network in Australia.
Three unlicensed third parties are being examined in the ASIC case, with the regulator claiming there were breaches of the National Consumer Credit Protection Act in relation to 74 home loan applications made between 2016 and 2018.
As well as declarations and penalties, ASIC has sought another order, for ANZ to engage an independent expert to conduct a review of ANZ’s existing home loan customer referral arrangements.
The regulator has proposed the expert would have to prepare a report within six months of being engaged by ASIC, assessing if the bank is complying with the Credit Act and assigning any recommendations if it isn’t.
ASIC has called for the review to be followed by a report signed by the expert and ANZ chief executive Shayne Elliott that states what steps ANZ has taken to give effect to the expert’s recommendations.
Sarah Court, deputy chair of ASIC stated the regulator is concerned loans may have been granted based on false information and that consumers may have entered home loans beyond their ability to pay.
“If banks are going to accept referrals of 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.
Introducer programs had received considerable criticism in the banking royal commission. Last year, NAB copped a $15 million penalty for contravening National Consumer Credit Protection laws through its introducer program.
ASIC has also alleged between November 2015 to June 2020, ANZ breached its general conduct obligations as an Australian Credit Licence holder by failing to take reasonable steps to ensure its representatives did not conduct business with unlicensed third parties and thereby failed to engage in credit activities efficiently, honestly and fairly.
ASIC’s concise statement also noted that the credit licensing regime had been introduced to address “concerns that brokers or intermediaries may misrepresent consumers’ financial details so that loans were approved and commissions paid”.
But, it went on to state that ANZ had exposed consumers to “a risk of wrongful conduct by the referrer, such as the provision of false or incomplete information and possible fraud; and the risk of entering into a credit contract that was not suitable for them, including because the consumers may not have been able to repay the loans, or may not have been able to do so without substantial hardship.”
ANZ has responded to the lawsuit, stating it co-operated with ASIC during its investigation and established a customer remediation program, alongside working on its home loan processes and controls.
A date is yet to be determined by the court.
[Related: Treasury urges for greater transparency from AFCA]
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