Knowing credit is not the same as knowing how to be a broker, writes Purple Circle CEO Michael Stephens
Home loan fraud investigations circling our industry have rightly shaken confidence in mortgage broking. With banks reportedly sharing blacklists, and allegations of a multi-billion-dollar syndicate at the centre of it all, the question is no longer whether we have a problem. It's what we should do about it.
Plenty has been said about aggregator due diligence, reference checks and lender accreditation. Those conversations matter. But in my view, one of the most overlooked structural weaknesses in our industry sits much earlier in the chain: how new brokers – and particularly ex-bankers – are inducted into broking.
Right now, both the Mortgage & Finance Association of Australia (MFAA) and the Finance Brokers Association of Australia (FBAA) require new-to-industry brokers to be mentored for two years. In practice, however, ex-bankers are routinely granted concessions – bypassing mentoring entirely or completing a heavily reduced program – on the basis that they already 'know credit', with some aggregators supporting that logic.
I want to challenge that assumption. Knowing credit is not the same as knowing how to be a broker. A banker has never operated under the best interests duty and has never had their individual file scrutinised one-on-one in the way a broker's needs to be under RG 273. Banks assess the customer; they don't assess the employee's decision-making in the way an aggregator compliance team assesses a broker's. The whole frame of reference is different.
It's also worth noting that some individuals at the centre of recent fraud allegations came into broking directly from senior roles at major lenders. That is not a coincidence the industry can afford to ignore.
What good mentoring catches
A proper mentoring program is far more than a refresher on policy and lender niches. Done well, it is one of the strongest fraud prevention tools we have, because it forces a structured, ongoing conversation about how the broker runs their business. A good mentor gets to understand who the mentee really is: where their leads come from, who is referring them and – critically – who the mentee is genuinely acting for. Is it the borrower? Or is it, quietly, the referrer pulling the strings behind the file?
That is exactly where recent fraud allegations have lived. Suspect referral channels, packaged applications arriving 'ready to go', third parties with too much influence over the customer file. A mentor reviewing deals one-on-one and asking the right questions about referral sources will see warning signs that a tick-box compliance audit will not – and can educate the mentee on what those signs look like before they become a problem.
A standard for ex-banker mentoring
Purple Circle's view is that the industry needs a defined standard for ex-banker mentoring. I'm not suggesting ex-bankers should complete the same full two-year program as a total novice. Their credit knowledge is real and should be recognised. But they should still be mentored, even on a reduced basis, with a focus on the best interests duty, file-level compliance, referrer due diligence and the cultural shift from 'bank employee' to 'broker acting for the client'.
This is the philosophy we have built into the Bankers Fast Track stream of the Purple Pathways Academy at Purple Circle. Purple Pathways was the 2024 and 2025 MFAA Mentoring Program of the Year, and Bankers Fast Track was designed specifically for experienced lenders moving into broking – acknowledging what they already know, while filling the genuine gaps a banking career doesn't cover. It is shorter and more targeted than a standard new-to-industry pathway, but it's still mentoring. It's still one-on-one. And it still asks the questions that matter.
Where the industry needs to go
Recent events are a painful reminder that the strength of our industry stands or falls on the integrity of the individual broker. Aggregator checks, lender accreditation and association membership all matter, but none can substitute for the early, personal, structured guidance a good program provides. If we want to prevent the next fraud event, we should be tightening mentoring, not waiving it. A defined standard for mentoring ex-bankers would be a low-cost, high-impact step in that direction, and one the industry should lead on rather than wait to be regulated into.
Michael Stephens joined Purple Circle Financial Services as a director in 2016. He served as chief executive from 2016 to 2022, returning to the role in June 2025.
