ANZ ‘trusts in brokers’

Accounts not used to check loan claims

ANZ puts more faith in expenses data filed by mortgage brokers than “contradictory” information from its own bank accounts when it assesses loan applications, the banking royal commission has heard.

The bank chooses not to scrutinise its customers’ bank statements to assess their expenses when they apply for loans through brokers, the commission heard yesterday.

Counsel assisting the commission Rowena Orr QC asked ANZ home loans general manager William Ranken if the bank was in breach of the credit code as a result.

ANZ had a “legal obligation under the National Credit Act” to “assess whether the customer has the ability to service commitments”, she noted.

But Mr Ranken rejected the suggestion ANZ had broken the rules, saying internal records of such expenses were “hard” to analyse.

The bank had other processes, including the use of the household expenditure measurement – or HEM – to assess expenses, he said.

That measurement makes use of statistical benchmarks and is used by all lenders but is widely seen as outdated and has already been criticised at the commission.

Ms Orr said: “You’ve got bank accounts to show that the expenses are different to what is recorded in the documents submitted by the broker – you say you do nothing about that,” she asked.

Mr Ranken said: “Our processes are, we do nothing.”

The ANZ executive said it would be “highly complex and costly” to contrast internal information with details provided by brokers.

Ms Orr presented a report prepared for ANZ last April by accounting titan KPMG that recommended using bank statements to check expenses.

The commission also heard that between October 2016 to September 2017, 58 per cent of ANZ mortgages came through mortgage brokers. These were valued at $67 billion.

Commissioner Ken Hayne asked Mr Ranken in what way brokers were incentivised to care about the accuracy of customer spending claims.

“Why is it in the interest of the broker for the customer to face the truth of their expenses,” he said.

“There is nothing in it for them, is there?”