Fraud headlines ‘paint industry with one brush’, brokers warn

Speaking to Broker Daily, brokers said that while vigilance was critical, it was equally important not to “paint the entire industry with one brush”.

The reactions came in the wake of allegations that brokers have been linked to suspected mortgage fraud, according to reports citing banker claims.

It came following reports on 27 February indicated that the Commonwealth Bank of Australia (CBA) had self-reported to police and corporate regulators over potential mortgage fraud estimated at around $1 billion.

The Australian Securities and Investments Commission (ASIC) told a parliamentary joint committee on 9 March that it was currently undertaking “compliance inquiries” with Australia’s largest lender in relation to the matter.

The Finance Brokers Association of Australia (FBAA) CEO Peter White AM said the association supported firm action against wrongdoing but warned against blanket attacks on the profession.

“Our industry is not immune to bad actors, but equally we must not accept any attempt to tarnish the overall reputation of brokers who are overwhelmingly of excellent character and go above and beyond to serve our clients and support lenders with integrity,” White said.

Measured approach

Brokers stressed that while fraud must be taken seriously, headlines should not disproportionately damage the industry’s reputation.

Bernard Desmond, founder and director of Blank Financial, said the issue risked being overstated.

“There is certainly an issue in any kind of industry, but I think the way this has been put out is trying to paint the entire industry with one brush,” he said.

“I certainly think that brokers are doing such a fantastic job in creating great outcomes for consumers. The majority of brokers are very diligent, and they’re like the front line protecting the banks in kind of avoiding fraud.”

Accendo Financial partner Trent Carter said his reaction to recent allegations was mixed, acknowledging the seriousness of fraud while cautioning against oversimplification.

“There is no question that mortgage fraud exists and that it is damaging to consumers, lenders, and the integrity of the system as a whole,” he said.

“Where I become concerned is when commentary begins to imply that fraud within the broker channel is either widespread, systemic, or primarily driven by broker behaviour.”

He added that brokers operate under significant regulatory oversight, including best interests duty and verification obligations, and that in many cases, fraud stems from “false or manipulated information being supplied to intermediaries rather than a breakdown in broker ethics”.

He added: “We should be cautious about creating narratives that undermine consumer trust in brokers. The broker channel consistently delivers strong outcomes on competition, cost, and access – particularly for self‑employed and SME borrowers. Addressing fraud should strengthen that channel, not weaken it through blunt or politicised commentary.”

Where does responsibility lie?

In terms of where responsibility for fraud prevention should sit, brokers pointed to a shared role across the lending chain.

“It has to be shared,” George Samios, founder of Madd, said.

“Brokers are obviously the first line of defence because we’re the ones sitting in front of the client, having those conversations and reviewing the information. There’s a responsibility there to ask the right questions and sense check what’s being presented.

“But it doesn’t stop there. Lenders have their own checks, systems and credit processes and regulators play a role in setting the framework and standards that everyone operates within. If any one part of that chain is expected to carry all the responsibility, that’s where gaps can appear.”

Carter said while brokers play a key frontline role, the burden can’t sit with them alone.

“Fraud prevention has to be a shared responsibility across the entire lending chain,” he said. “Brokers play an important frontline role… strong broker processes absolutely matter.

“However, lenders are uniquely positioned to detect fraud at scale. They control credit policy, data analytics, transaction monitoring, post-settlement audits, and access to broader datasets that brokers simply don’t have visibility over. Expecting brokers to identify every instance of document manipulation… is neither realistic nor effective.”

Reducing risk

For Desmond, reducing fraud risk starts with culture.

“No deal is more important than your reputation,” he said. “That’s the mandate from myself to all my team and my brokers… you get one strike and you’re gone.”

Desmond pointed to simple, practical steps as a starting point, particularly around client verification. He also highlighted the role of technology in reducing reliance on manual processes.

“If we can have more checks, we’re not just taking payslips and submitting an application, we’re verifying them,” he said.

“Whenever there is a manual process, that’s where people are more susceptible to fraud.”

For Samios, the focus is on consistency, both on how information is verified and how brokers are trained.

“On the verification side, continuing to strengthen how information is validated across the board is crucial… not just relying on one source but having multiple touchpoints and checks,” he said.

“But just as important is education… making sure brokers are well trained and confident in identifying red flags, and helping clients understand the seriousness of providing accurate information.

“At the end of the day, most brokers are in this industry for the long term. Reputation matters and trust is everything.”

Carter said better information sharing between lenders and brokers would have the biggest impact.

“The single biggest improvement would be better information-sharing and feedback loops between lenders and brokers,” he said.

“When lenders detect confirmed fraud… that intelligence is rarely fed back in a structured way to the broker community. Providing anonymised insights, red flags, and thematic learnings would materially lift prevention standards.

“Fraud is adaptive. Brokers cannot evolve their practices effectively if they only ever hear about issues after public allegations are made.”

[Related: Federal Court fines payday lenders $7m]

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