ANZ sued by ASIC over alleged lending failures

ANZ sued by ASIC over alleged lending failures

One of the country’s largest banks is in the sights of the Australian Securities and Investment Commission (ASIC), with the watchdog suing ANZ (ASX: ANZ) over an ‘introducer program’ for home loan referrals.

ASIC has commenced proceedings in the Federal Court against the bank for alleged breaches of the Credit Act arising from referrals through its home loan ‘introducer program’ and from unlicensed individuals outside the program.

According to the watchdog, the program involved home loan referrals to ANZ from third party ‘introducers’ from various professions, including cleaners and real estate representatives.

As such, ASIC alleges 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.

It also alleges that some of the documents provided to the bank were fraudulent.

“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,” ASIC deputy chair Sarah Court said.

“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.”

According to ASIC, 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, ASIC says the introducer program contributed to approximately 10 per cent of all home loans sold by ANZ’s branch network in Australia.

The watchdog also alleges 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 is seeking declarations, pecuniary penalties and other orders, including for ANZ to engage an independent expert to conduct a review of ANZ’s existing home loan customer referral arrangements.

ANZ has responded to the allegations, noting it has co-operated with the investigation and has established a customer remediation program.

“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,” ANZ said.

Shares in ANZ are up 0.18 per cent to $27.32 per share at 10.28am AEDT.

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