Commonwealth Bank, the country’s largest mortgage lender with roughly 25% of the home loan market, has uncovered compliance problems and signs of possible fraud in loans referred by external partners such as real estate agents, accountants, lawyers and financial planners. For years these third parties have been paid commissions for directing customers to the bank, a model widely used across the sector to bring in new borrowers without relying solely on mortgage brokers or in-branch staff.
In response to the issues, the bank has reported the matter to the corporate regulator and introduced new restrictions on its referral program, including a rule that it will no longer accept leads for customers who have not already held a loan with the bank for at least six months. The review follows a broader industry pattern where several major lenders have faced penalties in the tens of millions of dollars over similar third-party schemes involving unlicensed introducers, misuse of customer data and in some cases organised fraud. Despite the relatively low commission rates paid to referrers compared with mortgage brokers, these channels have become a flashpoint for compliance risk.
The fallout comes at a sensitive time for the bank’s home lending arm, which focuses on mortgages written through branches, mobile lenders and digital channels because they tend to deliver higher margins than loans arranged via brokers. The division has recently seen more than 20 lenders depart in a single month, with some moving to rival banks or into broking and senior leadership changes adding to the sense of instability. Against that backdrop, tightening referral rules appears to be a necessary step to reinforce trust with regulators and customers, although it is also likely to test the bank’s ability to keep expanding home loan volumes through its own channels while keeping risk and misconduct firmly in check.
