Australian probe of bank-sector misconduct begins with focus on home loans

Cornelia Mascio
Marzo 13, 2018

The first day of a powerful judicial inquiry into Australia's scandal-ridden banking sector on Tuesday heard National Australia Bank (NAB) issued nearly $19 billion in home loans under a scheme involving falsified documents.

During Tuesday's hearing, officials shone a spotlight on National Australia Bank's (NAB's) "introducer program", which paid third party professionals for referring their customers to the bank for loans.

Rowena Orr, a barrister assisting the Royal Commission inquiry in Melbourne, said NAB had derived more than A$24 billion ($18.9 billion) in home loans from the scheme between 2013 and 2016, when the misconduct took place.

NAB fired 20 bankers in New South Wales and Victoria previous year and disciplined 32 others, after the bank's review identified around 2,300 home loans since 2013 that may have been submitted with incomplete or incorrect information.

NAB Chief Executive Andrew Thorburn said in a statement on Tuesday morning shortly before proceedings opened that the problems were identified by a whistleblower in 2015 and that they were "regrettable and unacceptable".

The long-awaited Royal Commission follows years of scandals in Australia's financial sector including poor financial advice, interest-rate rigging, and accusations of breaking money-laundering rules. Selling tactics on mortgages, vehicle loans and credit cards are the first focus of the inquiry, whose final recommendations could lead to criminal or civil prosecutions as well as greater regulation on the financial sector.

Mr Thorburn says the bank has made extensive changes to its "Introducer Program", which will be the first case study examined by the financial services royal commission. Commonwealth Bank of Australia executives will be probed later this week about fraudulent broker arrangements and loan applications. Reuters data show that Australia's four largest banks - CBA, ANZ, Wetpac, and NAB - hold about 80% of the country's $1.7trn mortgage market.

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