By Paulina Duran
SYDNEY (Reuters) – The first day of a powerful judicial inquiry into Australia’s scandal-ridden banking sector on Tuesday heard National Australia Bank Ltd
It was the first bombshell of what promises to be an explosive year-long inquiry into the financial sector and especially the “Big Four” banks, which dominate the country’s A$1.7 trillion ($1.36 trillion) mortgage market.
Rowena Orr, a barrister assisting the Royal Commission in Melbourne, said NAB had derived more than A$24 billion ($18.9 billion) in home loans from the scheme between 2013 and 2016, when the misconduct took place.
“The introducer program was extremely profitable for NAB during the period where misconduct occurred,” Orr said, adding that it had involved about 60 bankers and branch managers, falsified loan documents, dishonest use of customers’ signatures and unsuitable loans to over 2,300 customers.
“The breadth of the misconduct, both in number of bankers and loans and the number of years over which the misconduct occurred, warranted further explanation in these hearings,” Orr said.
Senior NAB executives will be questioned on Tuesday afternoon about the scheme, under which the bank rewarded people who referred customers for home loans.
While the bank admitted errors in the program late last year and fired 20 employees for submitting inaccurate or incomplete home-loan applications, it had not previously commented on the extent of scheme.
NAB Chief Executive Andrew Thorburn said in a statement on Tuesday morning, released shortly before the Royal Commission opened, that the problems were identified by a whistleblower in 2015 and were “regrettable and unacceptable”.
“They should not have happened in the first place, and they show that we haven’t always done right by our customers or treated the community with respect,” he said.
The government-backed probe follows years of scandals in Australia’s financial sector including poor financial advice, interest-rate rigging, and accusations of breaking money-laundering rules. Selling tactics on mortgages, car loans and credit cards are the first focus of the inquiry, whose final recommendations could lead to criminal or civil prosecutions as well as greater regulation on the financial sector. Mortgages are Australian banks’ money-spinners, with the four largest banks – Commonwealth Bank of Australia
While Australia’s finance sector has been subjected to numerous probes in the past, it is the first time the whole industry has faced such scrutiny.
($1 = 1.2700 Australian dollars)
(Reporting by Paulina Duran; Editing by Stephen Coates)