The issue of trust has figured prominently in this week’s reportage. No surprise there. Never has the much used phrase “Trust & Verify”, first coined by Ronald Reagan, been so vital to the finance industry.
There are far too many sophisticated traps and scoundrels lying in wait to pounce on the careless, distracted and ill-informed whether they are industry professionals or customers.
Insiders
The mortgage industry has discovered that trust is no substitute for due diligence.
NAB wants a national economic crime strategy after uncovering widespread mortgage fraud involving brokers, accountants, advisers and other third parties.
Australia’s major banks estimate up to $4 billion worth of mortgages may be fraudulent, while the industry is considering a national register for brokers who repeatedly engage in misconduct.
Importantly, many within the broking industry argue that any register should apply equally to bankers, accountants and others involved in loan origination, rather than singling out brokers.
Almost comically, Broker News ran a story a few days ago suggesting that becoming a mortgage broker was now a dream job for many. This at the same time the industry’s biggest conversation is about how to identify the people who shouldn’t be in it. Irony?
At the same time, security experts are warning mortgage brokers that they are being targeted by criminals seeking valuable financial information and that SMS authentication with 2FA has become an increasingly weak defence.
The authors are urging finance industry professionals to adopt passkeys or hardware security keys.
Victims
If the Prime Minister’s banking records can allegedly be accessed without authorisation, confidence becomes everyone’s problem.
Police have charged two former contractors after the alleged unauthorised access of confidential Commonwealth Bank customer records, including those of Anthony Albanese.
Commonwealth Bank says the activity was detected through its internal monitoring systems and the matter referred to authorities.
Banks spend billions telling customers their money is safe. Sometimes the biggest risk isn’t breaking into the system. It’s already being inside it.
Meanwhile, a Queensland woman lost $150,000 to scammers who impersonated former CBA commentator, Tom Piotrowski, appearing on a fake ABC website. It was a reminder that sophisticated fraud now targets trust itself. The scam didn’t begin with technology. It began with credibility.
Lenders
Up until now, unless you were a customer, banks generally refused to help you recover stolen funds that had been deposited in their coffers.
Indeed, for scam victims, finding someone willing to accept responsibility has been harder than spotting the scam itself. That’s about to change.
From March next year, the Australian Financial Complaints Authority will become the repository of scam complaints, with powers to examine the conduct of banks, telecommunications companies and digital platforms.
The reforms follow years of victims finding themselves bounced between institutions while scammers emptied bank accounts.
Numbers
Today’s borrowers are constantly reminded that in the 80’s and early 90’s mortgage rates reached between 17-18 per cent and represented an historical peak for home loan stress, but it turns out that’s not correct.
According to an analysis by KPMG, The peak stress period is right now. The new data suggests current borrowers are facing the heaviest interest repayment burden on record because today’s much larger mortgages outweigh yesterday’s higher interest rates.
Criminals
Australia’s property market is about to become a little less welcoming to dirty money.
New anti-money laundering laws require real estate agents, lawyers, accountants, conveyancers and precious metals dealers to verify customers and report suspicious transactions.
AUSTRAC has previously estimated more than $1 billion is laundered through Australian property, making stronger identity checks a logical next step.
For legitimate buyers, it will probably mean little more than producing another form of identification. For everyone else, the paperwork may become considerably more interesting.
Final Thoughts
Australia’s financial system isn’t broken. It’s changing. Banks want stronger identity checks. Regulators want greater information sharing. Scam victims want accountability. Property professionals are becoming gatekeepers. Mortgage brokers are demanding higher standards from within their own ranks.
It’s what a modern financial system must become as trust fails.
While You Were Checking The Fine Print…..
Housing market cools – National home values slipped 0.4 per cent in June as higher interest rates continued to weigh on demand. Source: Savings.com.au
Mortgage repayments remain elevated – Victorian households continue to carry Australia’s highest interest burden despite improving affordability. Source: KPMG
Scam protections expand – New scam prevention measures and text message protections begin rolling out from July 1.
Interest rates remain on watch – The RBA says further rate rises remain possible if inflation refuses to ease.
