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National Australia Bank and ASIC - timing is everything.

BIScom Subsection: 
Editorial Staff

Yesterday, it was reported that a former branch manager with National Australia Bank had been convicted of fraud and that other prosecutions were in the pipeline. Today, ASIC, the Australian financial regulator, has said that it has issued proceedings against the bank. Is it a coincidence? One thinks not.

The case reported yesterday revolved around members of NAB's staff creating fictitious arrangements under which "introducers" would be paid a commission if someone they referred to the bank took out a loan. The scheme was an official NAB scheme, the bank accepted registrations from introducers and paid the commission. What was fictitious in the previous case was that the staff marked as introduced borrowers which had in fact come direct to the bank, thereby obtaining a secret commission to which staff were not entitled.

ASIC's action relates to the scheme itself which NAB says it will terminate on 1 October. The issues before the Court relate to the period September 2013 to July 2016 during which 16 members of staff accepted actual introductions from 25 introducers resulting in 297 loans. In those cases, the introducers were not licensed to conduct credit activity but what they did went far beyond saying something like "hey, I've got a friend who works at NAB why don't you give him a call?" ASIC's complaint is simple although their press release waffles on a bit. This is the salient point: "16 bankers accept[ed] loan information and documentation from 25 unlicensed introducers in relation to 297 loans."

There is background: "The imposition of a licensing regime was intended to address concerns that third-party referrers (including brokers and introducers) may misrepresent consumers’ financial details to ensure loans are approved, and their commissions are paid, in circumstances where the consumers’ true financial position means that the loan should not be made." The "Introducer Program" (which should be hauled up for appalling grammar in its title , if nothing else) resulted in some AUD24,000 million in loans between 2013 and 2016. The scheme required that introducers provided to the bank only the prospect's name and contact information. Instead, in the cases under review, "NAB bankers overstepped the ‘spot and refer’ requirement by accepting information and documentation from the 25 unlicensed introducers, including completed home loan applications, payslips, copies of customer identification documents and more. This behaviour can pose a serious risk to consumers, as ASIC also identified that in some instances the documents provided to NAB by the unlicensed introducers were false."

As for coincidence, the Alwan case is not part of this latest action.