Bank staff probed as liar loans skyrocket

NATIONAL Australia Bank has revealed it reported some of its staff to police after learning bankers issued 2300 home loans based on inaccurate and incomplete documentation.

The lender has sacked 20 bankers and taken action – including pay cuts – against another 32 staff embroiled in the scandal over suspect loans.

NAB lifted the veil on the scandal yesterday after quietly investigating the loans during a two-year process that involved talks with the corporate regulator.

“With some individuals, we have been referring them to the police,” NAB chief of consumer banking Andrew Hagger said. “What occurred was unacceptable.”

The scandal surrounds the bank’s so-called Introducer Program. Under that program, NAB pays commissions to businesses such as financial planning and real estate agencies that refer customers who then take out a mortgage.

The information provided for the loan-approval process often came from the thirdparty referrers rather than the customers, it is believed.

Many of the loans in question are believed have been given to overseas investors who bought property in the red-hot Victorian and New South Wales housing markets.

Jonathan Mott, an analyst at investment bank UBS, estimated in September that there were $500 billion of “liar loans” – where customers had made false claims in their mortgage applications – on the books of Australian banks.