ASIC has pointed the finger at mortgage brokers in its defence against Banking and Finance Consumers Support Association (BFCSA) allegations of loan fraud in its latest submission for the Senate Inquiry into the watchdog's performance.
BFCSA head, Denise Brailey has been at the forefront of an on-going steam of accusations and claims ASIC has failed to investigate ‘hundreds’ of cases of loan fraud and subsequently covered up a ‘systematic banking failure’.
However, in its submission on reforms to the credit industry and low doc loans, ASIC says that, while it’s received more than 150 letters from BFCSA members alleging widespread misconduct by lenders in relation to falsifying low doc loan application forms, the evidence doesn’t stack up.
“Almost all of the loans that BFCSA members have raised concerns about were entered into before the [NCCP Act] commenced, with most of the loans issued between 2004 and 2008. Where the borrower has provided details on the purpose of the loan, just over half were for investment or business purposes and as such were not regulated under the state and territory credit laws,” reads the submission.
Furthermore, the regulator claims that allegations of loan fraud is more commonly initiated by unscrupulous mortgage brokers – not lenders.
“Consistent with ASIC’s more recent experience under the NCCP Act, it appears that dishonest or fraudulent conduct has been more commonly found in relation to mortgage and finance brokers, rather than lenders.”
The submission comes as ASIC continues to dodge accusations over its failure to prosecute the Leighton Holdings bribery scandal and the CBA financial planners and Securency issues.
A date for Senate hearings is yet to be set.
