MFAA Releases Referrer Risk Guidance to Help Brokers Spot Fraud in Referral Relationships

The Mortgage & Finance Association of Australia has put out a new resource for brokers called the Referrer Risk Management Guidance, aimed at helping them spot and manage fraud risks that can arrive through referral relationships. It is available to members in the resources section of the MFAA website.

Naveen Ahluwalia, the MFAA's executive for policy and legal, described the problem to Australian Broker. Someone presenting as a legitimate source of clients may supply false documents, misrepresent a customer's circumstances, or become involved in activities beyond a straightforward introduction. An established relationship, she said, can create a familiarity that makes changes in behaviour easier to overlook.

The guide arrives as mortgage fraud keeps drawing attention. Reports in the fall suggested it had already become a multi-billion-dollar threat to Australia's lending sector, prompting brokers and lenders to look harder at how loan applications are verified. A central feature of the schemes is manipulated financial information, with borrowers allegedly altering or fabricating income documents to borrow more than they genuinely could. As artificial intelligence tools improve, fraudsters can produce more convincing documents, making detection harder.

Regulators are already focused on the issue. The 2017 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry led to sweeping reforms, including the Best Interests Duty, which requires brokers to act in their clients' best interests. In May this year, ASIC warned of the growing cyber risks posed by AI and urged licensees and directors to take immediate precautions. It has since said fraud is one of its 2027 strategic priorities.

Referrals are too important to brokers to ignore. Deloitte research for the MFAA's Value of Mortgage and Finance Broking 2025 report found they account for 40% of business leads. Ahluwalia said that makes clearer, practical guidance on managing them necessary. Small brokerages face particular strain, she said: they can be targeted themselves, and investigating suspicious activity pulls time from clients and running the business. Fraud can also bring financial, reputational and lender accreditation consequences.

The guidance was developed through the MFAA's Fraud and Referrer Working Group, with representatives from major aggregators and lenders. It covers impersonation, payment redirection, compromised communications, and false information or documentation entering the lending process. MFAA chief executive Anja Pannek said the response should follow conduct and evidence rather than assumptions about where risk sits, and called protecting trust a collective responsibility. Ahluwalia said the approach is ecosystem-wide and channel-neutral, filling a gap where legislation sets boundaries but offers limited detail on day-to-day risk management.

The guide lists several warning signs. A referrer may be unwilling to disclose identity or ownership details, resist providing documents, request unusual payments or try to steer lender or product choice. A referrer may control every conversation, supply all documentation or discourage direct client contact. Clients may seem coached, struggle to explain their applications, or give information that repeatedly conflicts with documents from the same source. Other flags include refusing reasonable due diligence and a lack of transparency about who referred the client, whether any financial benefit is involved and who is providing credit assistance. Ahluwalia said a warning sign should prompt further enquiry, which might mean extra checks, file reviews, compliance support or temporarily suspending referrals.

The recommended practices are plain. Know who owns and controls a referrer's business and check relevant registrations. Keep direct contact with the client and verify supporting information yourself, especially when the referral comes from another broker. Document roles, payments and responsibilities, explain the relationship to the client, obtain consent and use secure channels. Review arrangements over time, watching for document inconsistencies, complaints, lender concerns or shifts in referral patterns, and prioritise higher-risk ones.

The MFAA will hold a member webinar on 5 November at 2 p.m. AEDT, titled "Referrers, introducers and fraud: Managing risk in a changing landscape." Ahluwalia will host, joined by Scott Stierli of REA Group, Daniel Oh of Connective and Shirley Elliot of AFG.