Australia begins probe into financial sector misconduct

NAB's 'introducer program' has been the subject of evidence on the second day of a royal commission

NAB's 'introducer program' has been the subject of evidence on the second day of a royal commission

The first day of a powerful judicial inquiry into Australia's scandal-ridden banking sector on Tuesday heard National Australia Bank (NAB) issued nearly $19 billion in home loans under a scheme involving falsified documents.

Senior executives from National Australia Bank, the country's fourth largest bank by market size, will be questioned first over a loan referral program that rewarded outsiders such as accountants and lawyers with a commission for referring customers.

According to Rowena Orr, a barrister assisting the Royal Commission in Melbourne, the bank derived more than $24bn-worth of home loans when the misconduct took place from 2013 to 2016.

NAB fired 20 bankers in New South Wales and Victoria past year and disciplined 32 others, after the bank's review identified around 2,300 home loans since 2013 that may have been submitted with incomplete or incorrect information. "The introducer program was extremely profitable for NAB during the period where misconduct occurred, she said".

An Australian government-backed inquiry into misconduct by the country's major banks is scheduled to begin its first round of public hearings on Tuesday, focusing on residential mortgages, vehicle finance, credit cards and add-on insurance products. NAB Chief Executive Andrew Thorburn said in a statement on Tuesday morning, released shortly before the Royal Commission opened, that the problems were "regrettable and unacceptable". Dirty laundryThe inquiry follows years of scandals in Australia's financial sector including poor financial advice, interest-rate rigging, and accusations of money-laundering.

Mr Thorburn says the bank has made extensive changes to its "Introducer Program", which will be the first case study examined by the financial services royal commission. Australia's big banks are among the most profitable in the world, earning profit margins of 36.4 per cent in the June quarter of 2017, according to a paper published by the commission on February 9.

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