Royal Commission uncovers rife fraud and misconduct in Esanda car loans

22 March 2018

Royal Commission uncovers rife fraud and misconduct in Esanda car loans

Finance company Esanda, a former subsidiary of ANZ but now owned by the Macquarie Group, suffered from rife misconduct and fraud, the Royal Commission into Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry heard on Thursday.

Car dealers have been pushing up interest rates for customers in order to secure commissions, and brokers have been swapping customers’ details with those of the guarantor in order to get loan approvals.

It has also been alleged that a group of three dealers supplied Esanada with fraudulent payslips and bank statements to secure loans.

The swapping of the customers’ and guarantors’ details has affected 92 customers, to whom ANZ has had to refund $753,000. A further 547 customers had been affected by payslip and bank statement fraud which will result in refunds of $5 million.

This year, ANZ admitted to 24 breaches of responsible lending laws involving its car loan enterprises, and paid a $5 million fine. ANZ announced last week that it was suspending its consumer car finance products, in part due to ANZ’s inability to comply with responsible lending obligations, Guy Mendelson, ANZ’s general manager of small business banking, informed the Commission.

ANZ has increased the number of staff in its fraud department and put in place procedures to improve detection of payslip fraud, Mr Mendelson told the Commission. He also explained that ANZ had ceased so-called “flex commissions”, which allow car dealers to adjust interest rates so as to receive larger commissions without informing the customer that the rate is flexible.