NAB fined $15m for loan-introducer scheme

National Australia Bank has been fined $15 million in the Federal Court and savaged by the judge for its program of allowing unlicensed and untrained third parties to earn payments for spruiking its home loans to borrowers.

The bank admitted to 260 contraventions of the Credit Act and was awarded a fine of $100,000 per contravention. The court said the fine was discounted to $15 million because of its co-operation with the regulator.

Justice Michael Lee expressed shock that the bank allowed a program that was so flawed and inherently conflicted to continue for so long. He also acknowledged the significant amount of money NAB stood to make from it.

“There were no uniform processes in the 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,” Justice Lee said.

“At any one time, there were hundreds to thousands of these untrained introducers. What could possibly go wrong?”

The introducer program was a big money-spinner for the bank, generating about $24 billion in loans while handing out $150 million in spotters' fees to non-bank employees over four years.

The scale of both the program and the rorting of it peaked in 2015 when 5250 introducers referred $8.3 billion in loans and were paid $47.5 million in commissions.

The exploitation of the scheme was exposed in detail the previous year where third parties with little to no background in finance earned hefty commissions – including a tailor who made half a million dollars after he referred $122 million worth of loans.

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