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Following revelations of mortgage fraud, the Australian Securities and Investments Commission (ASIC) has announced a review of lender conduct as part of its 2026–27 banking-sector supervisory agenda, spanning proprietary lender incentives, bank referrer programs and lender oversight of mortgage brokers.
ASIC said the review would build on its work with the Australian Prudential Regulation Authority (APRA) and AUSTRAC in response to reported mortgage fraud.
Brokers speaking to Broker Daily welcomed the greater scrutiny but said accountability must be shared between lenders and brokers, with consistent standards applied across all lending channels.
What is ASIC reviewing?
The review, expected to commence in the third quarter of FY2026–27, will examine a variety of areas of lender conduct.
First, ASIC will assess the impact of changes banks made to short-term variable remuneration for proprietary lenders in 2024, including how incentives may affect lending practices and customer outcomes.
Second, the regulator will examine lenders’ use of referrers and the controls they have in place to manage risks associated with third-party introducer arrangements.
Third, ASIC will examine how lenders oversee mortgage brokers, including the systems they use to monitor broker-originated lending and identify potential misconduct. This could involve controls around broker accreditation and re-accreditation, application quality, fraud indicators, customer outcomes and remuneration arrangements.
ASIC also identified the use of AI by banks, offset accounts and support for customers experiencing financial difficulty as areas of focus for 2026–27.
Where should responsibility lie?
Kit Johnson, mortgage broker with Aussie in Forest Lake, told Broker Daily he had seen scrutiny of applications submitted through the broker channel increase in recent months.
“The market is tightening, lenders are leaning more heavily on their internal scoring and assessors are asking a lot more questions,” Johnson said.
“In practice, we are receiving more requests for written clarification across a wide range of points in applications. It feels as though assessors are trying to dot every possible ‘I’ and cross every possible ‘T’ to protect themselves from future file reviews.”
However, he added: “Of course we have no issue with proper due diligence. We all want sound lending decisions and protection against fraud.”
The comments come as mortgage fraud returns to the spotlight, with ASIC explicitly linking its planned review to reported cases of fraud.
In August, AUSTRAC’s Fintel Alliance said its Operation Claw analysis of information from 10 Australian banks had identified “systemic weaknesses” and “potentially hundreds of millions of dollars” in suspected fraudulent lending.
Major banks, such as the Commonwealth Bank of Australia and National Australia Bank, have also undertaken investigations that have found potentially billions of dollars in fraud.
The allegations have also included cases involving mortgage brokers.
On the question of responsibility, Matt Turner, founding broker of GSC Finance, said there should be a “balanced approach”.
“However, given the scale of the banks, there should be more focus on them providing us with tools to help weed out fraudulent loans,” he said.
Johnson said a secure interface with the Australian Taxation Office (ATO) could help brokers verify income, echoing calls for better verification tools raised by major banks at a recent Senate inquiry.
“I would like government and industry to develop a way to check income information against ATO records, with appropriate customer consent and privacy protections.
“That could help reduce reliance on documents supplied with an application and would also likely make for a better customer experience.”
Johnson also called for fraud detection tools to be integrated into AOL and aggregator systems.
“I would also like fraud detection tools built directly into AOL and aggregator systems, so document concerns and inconsistencies can be identified earlier. Lenders should help fund that capability and make it widely available to brokers and aggregators.”
Bernard Desmond, founder and director of Blank Financial, said: "Consumer protection shouldn’t depend on which door the customer walks through.
"If a standard is important enough to apply to a broker, we should be asking why that same principle wouldn’t apply across every channel distributing the same lending product."
Uneven oversight?
A recurring concern among brokers is whether lenders apply different standards to applications submitted through the broker channel and those handled by their proprietary teams.
“There is no consistency in how lenders treat their broker and proprietary channels commercially,” Johnson said.
“Lenders are actively trying to grow their own channels and competing directly with brokers through cashback offers and rates that we cannot obtain, even through their pricing process.”
Johnson said he had raised the issue with a lender’s state manager after one of his customers received a cashback offer and interest rate that he had been unable to secure for them.
“It was suggested that I offer cashback from my own commission to win the deal, and I was advised that many brokers were doing this.
“This does not sit right with me. It is hardly a level playing field.
“It also creates a real tension for lender managers who are expected to support brokers while their organisations are competing for the same customers. From a broker’s perspective, it can become unclear whose interests these managers are expected to prioritise.”
Turner also questioned whether brokers and bank-employed lenders were subject to consistent treatment.
“Brokers are always treated differently – there have been many instances where I have declined a client because their scenario doesn’t work only for them to mention their approval at a branch.”
He also argued that proprietary lenders should not be able to pay introducers who do not offer consumers a choice of lender.
“It is a flawed model that ignores a best interest duty and NCCP.”
Review broadly welcomed
Peter Liu, a practising mortgage broker and co-founder of AutoCalc, said he would welcome the review if it clarified responsibilities and addressed gaps between lenders, aggregators and brokers.
“Clear accreditation criteria, practical verification guidance and timely feedback would help professional brokers meet expectations and address concerns,” he said.
“Monitoring should be based on evidence and proportionate to risk, with prompt action on serious issues. I would also like to see incentives support sound lending and good customer outcomes across channels.”
Turner called for higher standards for new entrants to the lending industry, alongside more extensive background checks.
“There should be a zero-tolerance policy across the industry as well, although with a reasonableness test in place. It will be tricky to get right but it should apply to proprietary and broker channels with an outright ban on paid introducers that do not have a ACL/ACR.”
Johnson said the review should help create a “level playing field”, allowing brokers to access the same offers as bank staff for equivalent eligible customers.
He said: “I would also like to see greater investment in assessor training and access to experienced decision makers. Some of the questions and handling of applications suggest gaps in experience or understanding.
“For accreditation and monitoring, lenders should set clear expectations, provide practical support and make fair decisions based on evidence. Brokers should have a meaningful opportunity to respond when concerns arise.
“The review should improve the quality of the whole lending process, with consistent accountability for lenders, their own staff, referrers and brokers.”
Desmond called for the review to look at consistency.
"If there are weaknesses in broker oversight, fix them. If there are weaknesses in bank-owned channels, referral programs or incentive structures, fix those too.
"What we don't need is another layer of paperwork that makes getting a home loan harder without actually stopping fraud."
[Related: Four 2026 rate hikes deal $90k blow to borrowing capacity]
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