Powered by MOMENTUM MEDIA
subscribe to our newsletter

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.

Advertisement
Advertisement

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.

PROMOTED CONTENT


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
mortgagebusiness

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

US-based global asset manager Ares Management has made a non-binding conditional proposal to bid for 100 per cent of AMP Ltd shares. ...

The major bank’s FY20 cash profit has plummeted 42 per cent on the prior comparable period, driven by full-year credit impairment charges ...

A former property developer has been found guilty of fraud in relation to obtaining funds from SMSF investors following an ASIC investigatio...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: Court cases and penalties

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.