For too long, the major banks by-passed mortgage brokers to source home loans.
The NAB operated a spot and refer program from 2000; the ANZ Bank an introducer program from 2005. The NAB program continued until 2019; the ANZ Bank program continued until 2020. The programs were very successful. For example, in September 2018, 10% of all home loans sold by ANZ were introducer loans.
The banks promoted introducer programs to by-pass mortgage brokers, who are professionals and holders of an Australian Credit Licence, in favour of introducers, people recruited off-the-street with no training or licence. The introducers were cleaners, real estate agents, and the like, who received a ‘spotter’s fee’ for introducing loans to the bank.
After credit licensing was introduced under the Credit Act in 2010, the role of the introducers was changed to pre-vet the proposed borrower. The problem emerged that many loans were granted ‘on false information’ or made to borrowers ‘beyond their capacity to pay’.
In 2019, ASIC took the NAB to court and in 2020, the NAB was fined $15 million for breach of the Credit Act by conducting business with an unlicensed person (i.e. the introducers).
Now, ASIC has taken the ANZ Bank to court for what look to be more extensive breaches, to have the Court order a fine and the engagement of an expert to conduct a review of ANZ’s existing home loan customer referral arrangements. The fine will be considerably higher than $15 million given the much larger number of problem loans in the ANZ Bank case.
These actions taken by ASIC to enforce credit licensing, are good news for mortgage brokers because they are likely to spell the end of unlicensed home loan introducers.
For more detail on the Court proceeding