ASIC is taking ANZ Bank to court over its discredited ‘introducer’ housing loan program that generated more than $18 billion in home loans for 50,000 people from mid-2016 to early 2018.
In a statement issued on Friday morning, ASIC said the proceedings against ANZ were for “breaches of the Credit Act arising from referrals through its home loan ‘introducer program’ and from unlicensed individuals outside the introducer program. ”
The program involved home loan referrals to ANZ from third party “introducers” from various professions, such as cleaners and real estate representatives. The introducers received a commission if the introduction produced a home loan.
“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,” ASIC said.
“In September 2018, the introducer program contributed to approximately 10% of all home loans sold by ANZ’s branch network in Australia.”
Bank introducer programs received considerable criticism in the Financial Services Royal Commission and last year the NAB was hit with a $15 million penalty for breaching national consumer credit laws through its introducer program
ASIC claims 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 also alleges that some of the documents provided were fraudulent.
In the statement on Friday, ASIC Deputy Chair Sarah Court said “ASIC is concerned that as a result of this conduct some loans may have been granted by ANZ based on false information and some consumers may have entered into home loans that were 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.
A week ago, ASIC started civil penalty proceedings in the Federal Court against MLC Limited for insurance policy and service failures resulting from poor systems and controls.
ASIC claimed that MLC’s failure to implement appropriate systems and controls resulted in unpaid insurance benefits, premiums being charged without notice and underpaid refunds. ASIC alleges MLC’s conduct led to over $17.5 million in financial harm to over 260,000 customers.
The failures ran from 1999 to late 2020, according to ASIC
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In a separate statement on Friday morning the ANZ acknowledged the start of the legal action by ASIC.
ANZ said the civil penalty proceeding from ASIC related to three unlicensed third parties providing home loan application documents to ANZ lenders, including in connection with ANZ’s Home Loan Introducer Program.
ASIC is alleging contraventions of section 31 of the National Consumer Credit Protection Act (Credit Act) in relation to 74 home loan applications made between 2016 and 2018, and contraventions of general conduct obligations owed by credit licensees under the Credit Act.
“ANZ has co-operated with ASIC during its investigation and has established a customer remediation program as well as continuously improving its home loan processes and controls.
“ANZ is considering the matters raised in the Concise Statement and will not be providing further comment given the matter is now before the courts,” the bank said in its short statement.
