ASIC reviewing ‘lender oversight of brokers’ as watchdog plots priorities

The Australian Securities and Investments Commission (ASIC) will examine how lenders use referrers, pay remuneration and oversee mortgage brokers amid a mortgage fraud scandal that has rocked the home loan market.

The review, flagged in ASIC's 2026–27 banking sector priorities letter to bank boards, is expected to begin in the third quarter of the 2026–27 financial year.

In the letter, ASIC said it would "commence a review into various aspects of lender conduct". 

The wording is notably vague. The letter does not specify which lenders will be examined, how "referrers" will be defined, how the review will be run, or what “lender oversight of brokers” specifically refers to. MPA has reached out to ASIC for further details.

However, the timing is anything but coincidental. The review comes as the mortgage industry faces its most intense scrutiny since the Banking Royal Commission, with lenders, aggregators and brokers caught up in a string of fraud cases.

How the mortgage fraud scandal unfolded

Mortgage fraud hit the headlines in late February, when Commonwealth Bank reported itself to authorities over suspected fraud. Australia's largest home lender flagged a suspected $1 billion in fraudulently obtained home loans, describing it as an industry-wide challenge involving the mortgage broking and referral channels.

In March, AUSTRAC ordered 10 banks to hand over mortgage data to gauge the scale of the suspected fraud. When Westpac, ANZ, NAB and Macquarie reportedly began working with authorities, the suspected total doubled to $2 billion, with brokers operating under Hai Money, a sub-aggregator of Finsure, reportedly implicated. That figure was later reported to have grown to $3 billion.

Bank referral programs quickly came under fire. CBA's program pays third parties such as real estate agents and accountants a commission, typically around half what a broker received, for referring clients. CBA and Westpac still run introducer programs, while ANZ and NAB closed theirs years ago.

Peter White, then chief executive of the Finance Brokers Association of Australia (FBAA), argued that banks should scrap referral programs entirely to fight fraud.

In May, police charged a mortgage broker-banker couple allegedly linked to Australia's largest alleged fraud syndicate. Licensed broker Thu Huong Nguyen of HTN Finance was charged over almost $13 million in alleged loan fraud, while police allege her husband, a former bank employee, used his knowledge of lenders' fraud-detection processes to assist the syndicate.

Former Hai Money broker Andrew W. Hu was charged in December 2025 over close to $100 million in allegedly fraudulent loans, and solicitor Elic Tang was charged in April 2026 over more than $25 million in allegedly fraudulent property transactions.

In June, NAB confirmed it had referred fraud cases to authorities and exited or suspended a number of individuals and entities.In July, ASIC commissioner Alan Kirkland told brokers at the Mortgage & Finance Association of Australia (MFAA) national conference in Melbourne that the regulator was working with AUSTRAC, police and the major banks to tackle the growing fraud threat.

MFAA welcomes scrutiny

The MFAA welcomed ASIC's review, saying it had been raising concerns with the regulator for some time.

“As we saw during the Banking Royal Commission, large-scale referrer programs, particularly where there is inadequate due diligence, monitoring or oversight, can create significant vulnerabilities and avenues for fraud and poor conduct," MFAA chief executive Anja Pannek (pictured, below) said.

"We also welcome ASIC examining the impact of changes to banker incentives. Incentives influence behaviour, and it is appropriate that ASIC considers whether remuneration structures are creating unintended conduct risks or contributing to poorer consumer outcomes."

The association's Fraud and Referrer Working Group, which brings together lenders and aggregators, is developing Referrer Risk Management Standards covering due diligence, onboarding, customer contact, monitoring, red flags, escalation and termination. It is also pushing for better intelligence sharing on high-risk intermediaries.

"Fraud does not respect organisational or distribution boundaries. Strong controls within one organisation are only part of the solution if a high-risk individual can move elsewhere in the ecosystem without relevant information following them," Pannek said.

Broker channel already heavily regulated, MFAA says

Pannek said ASIC must recognise the regulatory framework already applying to brokers, including licensing, responsible lending obligations and the Best Interests Duty.

"Additional regulation should not simply be layered onto parts of the system that are already subject to substantial oversight. The focus must be on identifying where the real risks sit and addressing them," she said. "Consumers are best protected when conduct, incentives, controls and fraud risks are examined consistently across the entire lending ecosystem."

FBAA urges calm

The Finance Brokers Association of Australia (FBAA) today confirmed that it met with ASIC representatives to discuss the importance of maintaining a balanced focus as the regulator continues its review of lender oversight, referral channels, and broker conduct.

FBAA chief executive Leo Gagic (pictured, below), said: "While we strongly support efforts to identify and remove bad actors from the industry, it is equally important to recognise the vast majority of brokers operate professionally, ethically and in the best interests of their clients.

"Every industry has individuals who fail to meet required standards, and those cases should always be identified, investigated, and addressed. However, ASIC also has a significant opportunity to highlight positive case studies and examples of best practice that emerge from its investigations and supervisory work. Sharing what good looks like can provide valuable learning opportunities across the industry and help raise standards for everyone.

"As the industry continues to evolve, we encourage a regulatory approach that not only calls out wrongdoing but also shines a spotlight on excellence, strong compliance outcomes, and customer-first behaviour. Celebrating what is working well can be just as powerful as identifying what is not, helping brokers, lenders and consumers benefit from the lessons learned."

What else is on ASIC's radar?

The regulator is also keeping up the pressure on banks over mortgage offset account failures.

Its July 2026 report, Offsets, out of mind: Banks fall short on mortgage offset account promises, reviewed eight banks representing more than 70% of Australia's $2.5 trillion home loan market, including AMP Bank, ANZ, Commonwealth Bank, HSBC, ING, Macquarie and Westpac.

ASIC found weaknesses in how offset accounts were set up, monitored and managed. The banks had paid more than $55 million in compensation for offset failures, with further remediation expected.

The most common failure, accounting for 55% of cases, was an offset account that had been opened but never linked to the home loan. A further 22% involved accounts that customers requested but were never opened.

"When offset accounts don't operate correctly, the harm can be hidden," ASIC chair Sarah Court said. She told a parliamentary committee on 4 September that customers should receive the interest savings they were promised without having to find the failures themselves.

The issue is now the subject of a Senate inquiry, which was referred to the Economics References Committee on 15 September.

For what the inquiry means for brokers and their clients, see MPA's latest analysis of mortgage offset account failures.