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NAB grilled over failing to disclose ‘introducer’ fraud

NAB grilled over failing to disclose ‘introducer’ fraud

The big four bank failed to produce a document to the royal commission which revealed instances of “fraudulent payments to introducers”.

In the second day of public hearings held on Wednesday (14 March), National Australia Bank (NAB) was found to have omitted a document revealing misconduct between its employees and “introducers”.

The senior counsel assisting the commission, Ms Rowena Orr, QC, notified NAB’s executive general manager of growth and partnerships, Anthony Waldron, who again provided evidence on behalf of the bank, of minutes pertaining to a principal board risk committee meeting held on 4 November 2015 which outlined the alleged misconduct.

Mr Waldron, who was not a participant at the board meeting, claimed that he was unaware of the document and could not explain why the document was not submitted by 13 February 2018.

According to the QC, NAB failed to submit a formal statutory report to the Australian Securities and Investments Commission (ASIC) until February 2016.

Further revelations of alleged misconduct

Following on from evidence provided relating to alleged misconduct involving NAB’s “introducer program”, it was revealed that one NAB employee was dismissed, among other reasons, for accepting documents from introducers as “verification to support lending applications”.

Ms Orr noted that the various issues, which led to the employee’s dismissal, included:

  • wilfully entering false phone numbers on a customer profile
  • entering false information in relation to referrer contact details
  • dishonest reporting of alleged misconduct
  • emailing customer information to their personal email on multiple occasions
  • accepting documents from an introducer as verification to support lending applications rather than from the customer directly
  • directing other employees to process loans using verification documents, which had been received by an introducer rather than the customer

Misreporting and underreporting

In addition, Ms Orr revealed that NAB referred to misconduct identified as “inappropriate conduct” in its evidence to the commission, despite referring to such instances as “banker fraud” in a report produced to ASIC on 21 December 2015.

The QC stated that a joint task force commissioned by NAB, in conjunction with KPMG, uncovered alleged misconduct from a further 11 bankers and 33 introducers, in addition to the eight bankers and 13 introducers initially reported.

The task force particularly focused on the behaviour of four introducers and found that the total value of loans drawn by the introducers was $139.78 million, of which $3.61 million fell into delinquency.

Remuneration structure and sale culture as “root cause” of misconduct

The task force also noted that a sales culture incentivised misconduct from NAB employees by rewarding them with bonuses based on the volume of loans they settle.  

A report produced by the task force found that, as a result, bank employees:

  • did not hold face-to-face meetings with customers
  • accepted lending applications and supporting documentations without regard for reasonableness
  • transferred their own funds to customer accounts
  • assisted customers in preparing false payslips
  • accepted payments from customers for loan approvals
  • fabricated translations

 [Related: Analysis: Inside the lucrative mortgage referral program]

NAB grilled over failing to disclose ‘introducer’ fraud
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