Westpac's chief economist warns AI-generated fake documents are fuelling a growing wave of fraudulent home loan applications nationwide
Major banks have told a Senate committee that AI-generated fake documents are making mortgage fraud easier to commit and harder to detect, and are pushing for secure access to Australian Taxation Office (ATO) data to verify borrower income.
Westpac's chief economist, Luci Ellis, told the committee on Monday that the problem is a "burgeoning" one that is likely to worsen as more fraudsters realise what generative AI tools can do, according to the AFR.
Banks want direct line to the ATO
Australian Banking Association chief executive Simon Birmingham told the committee it was concerning that sensitive documents such as payslips and bank statements were still routinely submitted by hand or emailed as PDFs.
He argued artificial intelligence is making fake payslips and doctored statements frighteningly easy to produce, and said banks should be able to check application data directly against ATO records rather than relying on documents that can be manipulated.
The banks are pointing to the Consumer Data Right (CDR) – the government's open banking data-sharing framework, live in the sector since July 2020 – as the mechanism that could carry ATO data if the Taxation Administration Act were amended to allow it.
Westpac and NAB executives told the committee take-up of the CDR has been slow, and that the current bottleneck is verification, not lending decisions. The Australian Taxation Office said it is working with Treasury and the banks but remains constrained by secrecy provisions.
A scandal that has kept growing all year
The push follows a home loan fraud scandal that has dominated Australian banking headlines since Commonwealth Bank self-reported suspected fraud to police in February.
What began as an estimated $1 billion exposure has since been reported at closer to $4 billion across the five biggest lenders, with all ten of the country's largest banks now auditing their books.
NAB confirmed in June it had taken direct action against multiple parties involved in mortgage fraud, referring cases to authorities and exiting or suspending individuals and entities from the bank.
Separately, police allege a Sydney syndicate known as the Penthouse Syndicate defrauded Australia's major banks of more than $250 million, with charges laid against former bank staff who moved into broking.
In May, financial crimes squad detectives arrested a Wentworth Point couple whose alleged roles in the so-called Penthouse Syndicate illustrate the criminal organisation's core operating model: place trusted professionals inside the transaction chain, then use their institutional knowledge to systematically defeat the systems designed to stop exactly this kind of fraud.
Huy Tin Nguyen, 34, a former NAB and Commonwealth Bank employee, faces 19 counts of dishonestly obtaining financial benefit by deception plus a charge of participating in a criminal group – covering what police allege was approximately $31 million in fraudulent mortgages and business loans.
MPA's recent coverage of the industry's 2026 aggregator roundtable discussion found that access to ATO data, alongside existing CDR tools, was already being floated by aggregator executives as a way to verify borrower data at the source.
Culture, not just technology, in the spotlight
The scandal has also prompted industry soul-searching beyond the technical fix. MPA's coverage on mentoring's role in preventing industry fraud has argued that better induction of new brokers, particularly former bank staff moving into broking, is an overlooked defence.
Elsewhere, AFG's Christa Malkin made a similar point: technology can flag doctored documents, but it won't fix a system where fraud can hide inside legitimate-looking channels.
Senator Andrew Bragg, who chaired Monday's hearing, said any reform would only work if mortgage brokers embraced it, noting more than three-quarters of home lending flows through broker networks.
