National Australia Bank Sued Over Alleged Home Loan Breaches
National Australia Bank Sued Over Alleged Home Loan Breaches
(Bloomberg) -- National Australia Bank Ltd. has been sued by the securities regulator for allegedly accepting home loan applications from unlicensed ‘introducers.’
Under its so-called Introducer Program, the bank’s staff accepted information and documents in support of 297 loan applications from 25 people who weren’t licensed to engage in credit activity, Australian Securities and Investments Commission said in a statement Friday.
The suit follows a yearlong inquiry into misconduct in Australia’s financial industry, which heard the ‘Introducers’ -- whose ranks included architects, solicitors and a gym owner -- included fake signatures on loan applications, among other wrongdoing by bank staff.
Melbourne-based National Australia has been one of the companies hardest hit by the fallout from the inquiry. Andrew Thorburn quit as chief executive officer and Ken Henry is stepping down as chairman after the inquiry’s final report which questioned whether they were capable of leading the lender’s response to a string of scandals.
The bank said it “takes this legal action seriously and will now carefully assess the allegations.”
National Australia shares fell 0.4% as of 1:45 p.m. in Sydney.
The bank in March announced it would end referral payments to introducers and has established a remediation program for impacted customers.
The suit, filed in the Federal Court, is a sign Australia’s regulators will take a tougher approach to policing banks after the inquiry criticized them for failing to hold wrongdoers to account. The inquiry lambasted regulators for favoring negotiation over litigation, then reaching settlements that tend to favor the banks and extracting penalties that don’t have a deterrent effect.
The case claims 16 National Australia bankers overstepped the ‘spot and refer’ requirement of the Introducers Program by accepting completed mortgage applications and associated documents instead of conducting their own due diligence. The introducer would receive a commission from the bank for every loan approved.
Between 2013 to 2016, the program generated A$24 billion ($16.2 billion) of loans, ASIC said.
To contact the reporter on this story: Matthew Burgess in Melbourne at mburgess46@bloomberg.net
To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, Peter Vercoe, Katrina Nicholas
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