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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.


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BFCSA Michael West: Loan Fraud but No Investigation

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'Loan fraud' - but no investigation

June 5, 2013 - SMH

Michael West

                                           Lenders accused of 'systemic fraud'

Consumer activist Denise Brailey has countered claims from the corporate watchdog that she had failed to provide documents for them to investigate low-doc loan fraud.

Australian Securities & Investments Commission deputy chairman Peter Kell told Fairfax Media and the ABC this week that ASIC had invited Ms Brailey to “provide evidence of the systematic loan fraud she alleges”.

“The very limited material provided to date simply does not support any of the claims she makes,” said Mr Kell.

However, Denise Brailey has confirmed that more than 100 of the members of her action group, all alleging loan fraud, had filed complaints with ASIC only to receive a form letter saying there would be no investigation and advising them to get a lawyer.

ASIC turns down request

BusinessDay has contacted many of the borrowers to confirm this. The borrowers, many who are pensioners and small business people, cannot afford a lawyer. Of these complaints, many had Loan Application Forms (LAFs), which they claimed had been tampered with, attached.

“ASIC has close to 100 LAFs from members (of her action group Banking & Finance Consumers Support Association) who say they wrote letters to ASIC and lodged formal complaints and attached the offending LAFs,” said Ms Brailey.

“Others wrote letters (another 60 people or more) that were formal complaints that contained no LAF.  Every one of my members says they received an identical form letter from ASIC."

As reported on Monday, the veteran consumer rights campaigner has made public 2500 private emails and bank documents to expose what she describes as ''Australia's subprime crisis''.

Ms Brailey claims that lenders and mortgage brokers tampered with documents to provide more credit for borrowers with ''low-doc'' loans.

She says she is making private documents public after years of trying to get corporate regulators to investigate the banks and other lenders over what she alleges is ''systemic fraud'' in the ''low-doc'' market.

Low-documentation loans are made to borrowers such as business owners who can't prove a regular income, but the borrower signs a declaration as to estimated income. The loans usually carry a higher interest rate than other loans, as they are seen as more risky.

Of the borrowers who have asked for help from Ms Brailey's action group, Banking & Finance Consumers Support Association, 1170 of them claim their loan application forms (LAFs) have been tampered with. In most cases, the income figure has been increased to justify more credit. "There is not one clean 'LAF' among them," said Ms Brailey.

The banks and the corporate regulators reject Ms Brailey's claims. They say fraud in the low-doc loan market is the fault of ''rogue'' mortgage brokers.

In his repudiation this week of the Brailey claims, Mr Kell said ASIC had recently banned seven mortgage brokers for fraud or misconduct relating to loan applications.

Not just 'rogue brokers'

However, the flood of responses this week to the Brailey claims, along with the emails and other documents published this week on her website, support the view that low-doc fraud is more widespread than the work of '‘rogue'’ brokers.

Lawyer Graeme Hancock, who has assisted victims of low-doc lending, says the cases he has seen corroborate this.

“I’ve reviewed many files from BFCSA,” Mr Hancock said. “I’ve seen towards 100 Loan Application Forms, all of which have been completed in more than one set of handwriting, and all the income details are grossly overstated in someone else’s handwriting.

“The mere fact that I have seen the same thing in so many cases clearly suggests this type of thing is systematic. Other parts of the process, such as the broker asking the borrower to sign the application form as ‘true and correct’ without all the detail being included is just too widespread to be just a coincidence.”

Most of the people Mr Hancock had interviewed did not have the means of fighting lending recoveries. The situation had improved with the introduction of the national lending laws in 2010. Until then it was only NSW borrowers, under the Contracts Review Act, who could ask the court for relief on the basis that the transaction was unjust.

“But that doesn’t help anybody before then and I gather they are the vast majority of cases. Without being able to take the unjust route you would be left trying to prove that the transactions and the relationship was unconscionable, which is very difficult,” he said.

Service Calculator

In another aspect of the claims, Denise Brailey has downloaded on her website information relating to the Service Calculator which she says is the program used by all the banks and other low-doc lenders that determines loan approvals.

It is via the Service Calculator that the lenders are orchestrating the low-doc lending process and using the brokers as their agents, she claims. Mortgage brokers have a password the Service Calculator which enables them to enter the bank and non-bank lender’s computer system to have loans processed but it is the lenders who determine the outcome.

Therefore, she claims, the lenders are responsible for the ‘imprudent lend’ to customers who cannot afford the loan.

Ms Brailey has called on ASIC and the Financial Ombudsman Service to use their powers to demand the lenders release the Loan Application Forms and information relating to the Service Calculator which she maintains is the key to unlocking the systemic fraud.

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6 comments so far

·         Yes, I do believe that Australia also embarked in a sub-prime lending during the boom years. It was not as ridiculous as in the US, but it did happen. I think most of this will be handled "behind doors" though as nobody is interested in having a similar housing crisis to what happened in the US to also happen here. The banks will just try to deal with this quietly and compensate the borrowers if they lose in court or force the borrower to sell and get their money back. I'm sure the government will be protecting the banks to avoid a crisis from spreading...


·         There's something fishy going on at ASIC.

Sarajane    melbourne

 Well done: I read Peter Kell's letter to the editor today accusing Ms Brailey of making unsubstantiated claims. I smelt a rat at the time and am glad to see you called him to account so quickly. Problem with these bureaucrats is they fob people off until they give up, so I suggest everyone with problems unite and don't let them squirm out of it.


·         Its starting to look obvious. ASIC is in bed with the banks. There is lack of care and due diligence for small clientsl! Insurance Ombudsman is another party that should be investigated. Big banks have insurance companies ....and lot of claims are denied for little technicalities or small prints!!!


 How is this a surprise? ASIC and the ATO for that matter are afraid to take on the big end of town due to the fight that will ensue. They are much more at ease tackling the "little guy" who doesn't have the resources to fight back like these big companies do.


 ASIC is a toothless and clawless tiger unable and unwilling to drive a wedge between vested interests and the government. The banks and other usury businesses are untouchable in an economy that is a junkie for limitless credit expansion. They know it and corruption has been allowed to ensue with impunity. There's no sub-prime in Australia they say - here, drink this kool-aid.

It will take a reversion to mean episode for this whole sorry mess to be exposed, and then we'll have to listen to them tell us with a straight face that they didn't see it coming.


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  • doyla66
    doyla66 Thursday, 06 June 2013

    Good stuff :)
    FOS have been saying that the errors on the LAFs are "mistakes". So are they deliberate "mistakes" or accidental? An awful lot of "mistakes" made it through the Banks' credit assessment team.
    What about the "mistakes" or more likely "corrections" made by the Bank staff? Where were their internal auditors? What about external audit? Senior bank staff? Random checks by AOFM? Anyone at home anywhere doing a bit of checking up? Any reminders or remedial broker lessons to prevent these "mistakes" occurring again?
    What about the Bank who recently changed the "mistakes" so the loan looked compliant?
    Just like the investment instructions given to the financial planners?
    "Mistakes" of convenience?
    How about internal Quality Assurance and Banking Code Compliance Officers? None of those audits either?
    No requirement for any statements, audits internal or external, for ASIC, APRA, AOFM?
    De-regulated banking - tick.
    Self-regulating banks - tick.
    How many Banks and lenders signed on with the Banking Code after 1993?
    Which ones did and when did they sign on?
    Did any of them read it? Think it might be relevant?

    Regardless of all of the above, if a document shows any unauthorised alteration it must be investigated. Multiple alterations, even more so. Repeated multiple alterations, alarm bells should sound. Multiple repeated alterations across multiple lenders and many years ... which is what we have here
    Royal Commission into Banking and Finance - no question about it.
    ... and goodness knows what else we will unearth in the process of investigation ...
    So we need wide terms of reference.
    It's not rocket science - it's logic. We have a giant problem and no one wants to investigate in case they find something they can't deal with?
    What about us - the borrowers?
    We're not responsible or liable for either Bank/lender or broker errors. All their own work.
    Note to Banks and other lenders : no repossessions permitted on any loan that looks like the 100 or so on this site.
    You'd better start thinking up a better excuse than "mistakes". We've all been comparing notes on FOS, ASIC and COSL :D

  • doyla66
    doyla66 Thursday, 06 June 2013

    Calculator: "Son of Skippy" -- bounding around "The Cash Store"

    The Cash Store's -- "credit assessment calculator" -- has recommended loans even when a customer's budget was in the red.--will blog soon! Bank$sters -- the BFCSA noose is getting tighter around your sorry necks!!!

  • doyla66
    doyla66 Thursday, 06 June 2013

    Mistakes on 1200 lafs and counting - what are the chances that they have made a mistake on everybodies income and occupation 1200 of them. Really Asic, do you know how utterly rediculous that sounds??? I mean do we have stupid written across our foreheads???

  • doyla66
    doyla66 Thursday, 06 June 2013

    Totally stupid. Like Kell's effort in Senate Committee this week. Kell would have thought, "That went well." - I kid you not.
    Kell should shut it - opening his mouth to change socks doesn't help his image.
    I'm hoping ASIC/EDRs are just passing on the bank legal nonsense, as the banks try to get a borrower agreement so they can compensate for loan losses through insurance. Fairly predictable strategy.
    As for ASIC and Bank reluctance to perform any checks and balances to prevent compound "errors" ... I wouldn't be asking them to build a bridge. Too many economists in the mix. (Thankyou to Steve Keen - Debunking Economics Video).
    ASIC and the Banks are both hoping they can make the pre GFC loan "errors" disappear into history ... with some help from the EDR restrictions. What about the post-GFC loan "errors"?

  • doyla66
    doyla66 Thursday, 06 June 2013

    "Suppose you were an idiot, & suppose you were Deputy-Chair of ASIC; but I repeat myself." Mark Twain: The proverbial Fox looking after the hen house, indeed! ---Peter Kell commenced as Deputy Chair on 6 May 2013. Prior to this appointment he was Commissioner from 7 November 2011. ---Before joining the ACCC, Mr Kell was Chief Executive of CHOICE (the Australian Consumers' Association) and a board member of the global consumer organisation Consumers International.

  • doyla66
    doyla66 Thursday, 06 June 2013

    Thankyou, Andy. I wondered where Kell got his experience. And then, who was advising him that this was the way to handle Denise Brailey and her claims. Had he applied ASIC scrutiny with openmindedness, intelligence and sensitivity to a careful assessment of Denise's research and evidence and responded appropriately Kell and ASIC could now be enjoying the public praise at least for the Loan Fraud work.
    The same could be said for all in government on both sides of politics, with some well known exceptions. Look at the public and media respect shown to both Doug Cameron and John Williams for their shining light refusal to accept lies, fluff and ASIC nonsense. :) In reality they're two senators endeavouring to do their job, against the odds. They're the reps of every Aussie who ever wanted to get straight answers from ASIC.
    The Australian public are starved for this accountability of the public service by our parliamentarians.
    The Australian public know full well something is not right with our banks and our country's finances.

    Kell inherited both the CBA Whistleblower and Loan Fraud cases - just to mention two kegs of dynamite in the ASIC garden shed. Both cases leaking aplenty and lids blowing off. Kell is politically foolish to fail to respond appropriately over the publicly available evidence and the MSM media articles and redeem his position in the process.
    For all Kell's consumer experience, sadly you can't put an old head on young shoulders.

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