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Source: Reuters
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  • Australia’s corporate watchdog is suing big-four bank ANZ (ANZ) for breaching the Credit Act through its “introducer” program
  • The program saw unlicensed parties like real estate representatives and cleaners receive commission from ANZ for funnelling prospective borrowers towards the big bank
  • However, ASIC is alleging ANZ accepted customer documents from unlicensed parties under the program, resulting in several breaches of consumer protection credit laws
  • This means some customers may have entered into home loans with ANZ that they could not afford
  • ASIC said from 2015 to June 2020, over 50,000 loans were referred to ANZ through the introducer program, resulting in some $18.5 billion of loan originations
  • Shares in ANZ were down 0.33 per cent to $27.18 at 1:19 pm AEDT

Australia’s corporate watchdog is suing big-four bank ANZ (ANZ) for breaching the Credit Act through its “introducer” program that resulted in some $18.5 billion of loan originations.

The program saw unlicensed parties like real estate representatives and cleaners receive commission from ANZ for funnelling prospective borrowers towards the big bank.

ASIC said from 2015 to June 2020, over 50,000 loans were referred to ANZ through the introducer program, with the program accounting for roughly 10 per cent of all loans sold by ANZ’s Australian branches in September 2018.

The issue around the program, however, was that ANZ was not allowed to receive customer information and documents from unlicensed individuals under consumer protection credit laws, according to ASIC.

The watchdog is alleging that the introducer program saw ANZ breach consumer protection laws in relation to 74 home loan applications between 2016 and 2018.

Deputy Chair Sarah Court said ASIC was concerned that as a result of the introducer program, some loans may have been granted by ANZ based on false information.

This meant some customers may have entered into home loans with ANZ that they could not afford.

“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.

ASIC is alleging that ANZ failed to take reasonable steps to ensure its representatives did not conduct business with unlicensed third parties and, as such, “failed to engage in credit activities efficiently, honestly, and fairly”.

One of the key concerns listed in ASIC’s filing stemmed from the nature of ANZ’s relationships with its representatives under the introducer program.

The watchdog said ANZ did not have adequate processes to monitor its representatives and ensure they were not accepting customer information or documents from unlicensed parties.

Moreover, the representatives had an incentive to sell home loan products to meet performance indicators for their own financial gain, and therefore “had an interest in not highlighting non-compliance,” ASIC said.

ANZ this morning acknowledged the legal proceedings in a media statement.

“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,” the bank said.

Shares in ANZ were down 0.33 per cent to $27.18 at 1:19 pm AEDT. The company has a $76.6 billion market cap.

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