Warning on fraud as ASIC bans mortgage brokers for $3.45 million in false loan documents

The corporate regulator has banned a credit business manager and a mortgage broker for submitting false documents to secure loans worth $3.45 million. 

The Australian Securities and Investments Commission announced this morning it has banned Anthony Bergin from engaging in credit activities for three years after an investigation found his company submitted seven home loan applications worth $3.2 million to a lender that contained false or misleading information, including false payslips.

ASIC’s investigation found Bergin’s company, Equity Financial Management, submitted the loan applications between September 2011 and February 2012.

ASIC also banned Hyuk Hwang, a former Sydney mortgage broker and real estate agent, from engaging in credit activities for three years after an investigation found he was involved in the submission of false documents to secure a loan worth $250,000.

ASIC’s investigation found Hwang allowed another person access to his online broker system in July 2012 and allowed that person to submit a loan application and documents to Westpac which contained false information.

Hwang included a letter of employment from another business he owned which falsely represented the borrower was employed by, and received an income from, that business.

Hwang was aware the application and the letter contained false information at the time they were submitted to Westpac.

Bergin, Equity Financial Management and Hwang all have a right to a review of ASIC’s bans through the Administrative Appeals Tribunal.

ASIC deputy chairman Peter Kell said ASIC has taken action against eight credit providers in the last three months, including two convictions, three permanent bannings and three bannings totalling 11 years.

“This number is unacceptably high. ASIC will not hesitate to take action where we encounter deliberate breaches, serious misconduct or significant risk of consumer detriment,” he said in a statement.

Phil Naylor, the chief executive of the Mortgage and Finance Association of Australia, told SmartCompany this morning the market has been watching closely to see how hard ASIC is on brokers who break the rules.

He says it is important to look to whether brokers are members of the MFAA. Hwang was a member until March last year when his membership was cancelled. 

“We have very robust rules which are even higher than ASIC’s standards,” Naylor says. 

“It seems in both these cases that obviously information has been supplied and falsified and whether this is with the customers knowledge it is not clear.”   

Since 2003 the MFAA has expelled or suspended 60 of its members, which Naylor says “is a small number” out of 10,000 members, while ASIC has taken action against another 10 or 11 brokers since it took jurisdiction.

“It is reflective of the small proportion of people in the industry who do the wrong thing,” Naylor says.