NAB has been fined $15 million after its controversial $24 billion referral program blew up
20 Oct 2020

A large corporate fine hurts, but not nearly as much as having the judge presiding go to town over your offences.

NAB is finding that out the hard way on Monday, after being slapped with a $15 million fine for its controversial ‘introducer’ program, that rewarded any Tom, Dick and Harry for referring it potential customers.

The premise was simple. Funnel the bank customers, and if they took out a loan, NAB would kick the ‘introducer’ a commission.

“There were no uniform processes for selection of the Introducers, no requirement that they have any particular training and no minimum level of due diligence; there was also no relevant formal training for ‘frontline’ bankers, including as to the nature of the information the Introducer could lawfully provide,” Justice Lee summarised in his judgement on Monday.

In other words, the program became a free-for-all, incentivising thousands of “financially interested third parties” to collect information on Australians and then inform on them to NAB.

“What could possibly go wrong?” Lee asked rhetorically.

The good Justice is of course well aware of what went wrong, as everyone from bankers to accountants to real estate agents milled about to get their kickbacks.

It was a win-win. A bunch of money-hungry bottom feeders got their fill, pocketing more than $47 million in 2015 alone. The top four stars, including a gym owner, made nearly $140 million between them.

Meanwhile, NAB managed to generate more than 46,000 loans worth an impressive $24 billion.

“It operated from at least 2000, lasting for around 19 years until it was, to use the NAB’s euphemistic term, ‘retired’,” Lee said.

On the surface, it was a wild success. But underneath, it was open season as some began falsifying everything from payslips to letters of employment to ensure approvals were given and commissions paid.

Of the sample of bad apples caught up in the ASIC investigation, some have been banned from providing financial services for years to come.

In retrospect, it seems obvious that a multimillion dollar honeypot program would attract fraud. Given this one ran with “no minimum level of due diligence”, “no compliance”, and “no consequences”, it now seems obvious that it would eventually run afoul of the law.

By Jack Derwin, Business Insider, 19 October 2020

Read more at Business Insider

RiskScreen: Eliminating Financial Crime with Smart Technology

Advance your CPD minutes for this content, by signing up and using the CPD Wallet

FREE CPD Wallet