# False details on a home loan application: the law and the checks What counts as false information on a home loan application, what the law says for borrowers, brokers and lenders, how lenders check, and where a misled borrower can turn. --- A home loan application is a set of statements about one household: what it earns, what it owes, what it spends, where the deposit came from and what the property is for. Most applications are accurate. Some are not, and the reasons vary widely. A buyer rounds an income up because the borrowing figure fell just short. A debt is left off because it "will be paid out anyway". A form is filled in by somebody else and signed in a hurry. Occasionally a document is altered. Three parties carry duties here, not one: the borrower who makes the statements, the broker who passes them on, and the lender who has to check them. This guide sets out what counts as false information, what Queensland and Commonwealth law say for each party, what the regulators have published, how lenders verify an application today, what follows when a misstatement is found, and where a borrower misled by an intermediary can turn. It describes general rules and does not replace legal advice on a particular file.
5 yearsbasic maximum for fraud in Queensland
20 yearsmaximum where $100,000 or more is involved
100%top penalty on a wrongly paid home grant

Criminal Code (Qld), section 408C; Queensland Revenue Office public ruling on grant penalty amounts, issued 31 March 2021.

## What counts as false information There is no legal list of "small" and "large" untruths. What matters is whether a statement is false or misleading on something that bears on the decision to lend. ASIC's responsible lending guide, Regulatory Guide 209, summarises the position under the National Credit Code: all parties, consumers and brokers included, must not make false or misleading representations about matters that are material to entering a credit contract. In practice the misstatements fall into a handful of families, each of which can be tested against a different record. Leaving something out counts as much as writing something false.
Common misstatements and what they are compared withGeneral description, not a list of any one lender's checks
MisstatementWhat it looks likeWhat it is tested against
Overstated incomeA salary rounded up, overtime shown as certain, a second job that has ended.Payslips, salary credits on statements, tax records, the employer.
Hidden debtsA car loan, a credit card or a buy now pay later account left off.The credit report and repayments leaving the account.
False documentsAn altered payslip, an invented employment letter, an edited statement.The original source and the file's own data.
False "genuine savings"Borrowed or gifted money shown as savings built up over time.Months of account history showing where each deposit came from.
Undisclosed gift or loanFamily money described as a gift when it must be repaid, or not mentioned.Statements and a signed declaration from the giver.
Misdescribed purposeAn investment purchase described as a home to live in.Addresses on file, later rental income, insurance and tax records.
Not every wrong figure is dishonest. Regulatory Guide 209 says information can be unreliable because of an honest mistake, because of carelessness by a person helping with the application, or because of deliberate fraud by the consumer or the helper. The most serious consequences attach to the last of those. ## The borrower's position under Queensland law The main state offence is fraud, in section 408C of the Criminal Code. It covers a person who dishonestly obtains property from another, induces a person to deliver property, or gains a benefit or advantage. The section's own definition of "property" includes credit, so money advanced under a loan falls within it. The maximum penalty is 5 years' imprisonment for the basic offence. It rises to 14 years in listed circumstances, one of which is that the property or the benefit is worth at least $30,000 but less than $100,000. It rises to 20 years where the value is $100,000 or more, or where the person carries on the business of committing the offence. Almost every home loan is larger than $100,000, which is why the top tier is the relevant one for this subject. Those are maximums set by Parliament, not typical outcomes, and the key word is "dishonestly": an innocent error on a form is not fraud. The section also says a person can still be found dishonest even though they were willing to pay for the property or intended to make restitution. Meaning to make the repayments is not, by itself, an answer. Alongside the criminal law sits the civil position under the National Credit Code. Regulatory Guide 209 notes that a consumer or broker who makes a false or misleading representation may be liable for the loss that results.
Worth knowing

A false statement can shrink the borrower's own remedies

Responsible lending law lets a borrower seek compensation where a lender or broker failed in its duties. ASIC's guide says that compensation can be reduced where the borrower made a false or misleading statement to get the loan. A misstatement therefore weakens the protection the borrower would otherwise rely on if the loan later proved unaffordable.

## The broker's duties and offences A mortgage broker sits between the borrower and the lender, and the National Consumer Credit Protection Act 2009 places specific obligations on that position. The first is the best interests duty. ASIC's Regulatory Guide 273, issued on 24 June 2020, explains that brokers have had to comply since 1 January 2021. Under sections 158LA and 158LE, a broker must act in the best interests of the consumer when providing credit assistance. Under sections 158LB and 158LF, where the consumer's interests conflict with those of the broker or related parties, the consumer's interests come first. The guide says there is no "safe harbour", and that a disclaimer or the consumer's consent does not discharge the duty. The guide then addresses the temptation directly. Providing incomplete or inaccurate information in an application means the broker is not acting in the consumer's best interests, even where it improves the chance of approval or the terms on offer. Where information is inaccurate on its face, the broker should make further inquiries. The second obligation is a criminal prohibition. ASIC described it in a media release of 29 July 2016: section 160D of the Act makes it an offence for a person engaging in credit activities to supply false or misleading information or documents to another person. An ASIC release of 16 November 2020 about a New South Wales prosecution stated that, at the time of the conduct in that case (2017), the maximum penalty for a breach of section 160D(2) was two years' imprisonment. ASIC can also ban a person from the credit industry, which is a separate administrative power. The third is responsible lending. ASIC's summary of Chapter 3 of the Act says a credit licensee must not suggest, or help a consumer apply for, a credit contract that is unsuitable. A broker makes reasonable inquiries, takes reasonable steps to verify the consumer's financial situation and makes a preliminary assessment. A broker who offers to "tidy up" a figure is therefore offering something the Act that licenses brokers forbids. ## The lender's own obligation to check A lender cannot simply rely on what it is told. Chapter 3 of the Act requires the credit provider to make reasonable inquiries about the consumer's financial situation, requirements and objectives, to take reasonable steps to verify the financial situation, and to make a final assessment of whether the contract is "not unsuitable". Regulatory Guide 209, issued on 9 December 2019, sets out how ASIC reads those words. It says information can only be taken into account if the licensee had reason to believe it was true, or would have had that reason had it made the inquiries and verification the law requires. It quotes the financial services royal commission's interim report on the point: "Verification calls for more than taking the consumer at his or her word." The guide also lists warning signs that call for firmer verification, such as very little income left over after the new repayments. And it makes clear that relying on a broker to supply true information is not enough: the lender keeps its own, separate duty to verify.
Three parties, three sets of rulesAs described in the sources named in this guide
PartyMain ruleWhere it comes from
BorrowerMust not dishonestly obtain credit, and must not make false or misleading representations material to the loan.Criminal Code (Qld) section 408C; National Credit Code.
BrokerMust act in the borrower's best interests, verify, and never supply false or misleading information or documents.National Consumer Credit Protection Act, sections 158LA, 158LE and 160D, and Chapter 3.
LenderMust make reasonable inquiries, take reasonable steps to verify and assess the loan as not unsuitable.National Consumer Credit Protection Act, Chapter 3; ASIC Regulatory Guide 209.
## What the regulators have published ASIC became the national consumer credit regulator on 1 July 2010, and loan fraud has been one of its standing enforcement subjects since. In its release of 29 July 2016, ASIC said it had taken 79 actions involving loan fraud since that date, including 60 actions to ban individuals and companies from the industry, and had commenced 13 criminal proceedings. By 30 April 2018, another ASIC release put the number of loan fraud matters it had investigated at more than 100, with outcomes ranging from undertakings to leave the industry voluntarily to bans and prosecutions. The individual cases show what the conduct usually is. The 2018 matter concerned 21 home loan applications and more than $17 million of home loans financed in reliance on false documentation. The New South Wales case reported in November 2020 involved applications for four customers that falsely stated they were employed by a company of which the broker was sole director. Two loans totalling $784,000 were approved, the broker received commission of $8,612.36, and he pleaded guilty to five counts. On occupancy, the published record is about data quality more than wrongdoing. On 11 March 2016, APRA wrote to all authorised deposit-taking institutions after some had reported large shifts of housing loans between the investment and owner-occupied categories. It told them a loan must be reported under its current purpose from the month a change occurs, because APRA, the Reserve Bank and the Australian Bureau of Statistics rely on the figures. The Reserve Bank's financial aggregates release for March 2017 estimated the net value of loans switched from investor to owner-occupier at $51 billion between July 2015 and March 2017. Many such switches are legitimate, as when an owner moves into a former rental. The episode matters because it put the purpose recorded against each loan under closer watch. There is also survey evidence, of a softer kind. An annual survey of recent borrowers by the investment bank UBS, reported by the trade publication Mortgage Professional Australia on 15 September 2021, covered about 900 people who had taken out a mortgage in the previous year. The answers are what people said about themselves, most describing an application as "mostly" accurate. They are not findings of fraud.
Borrowers who said their application was not entirely accurateShare of recent borrowers surveyed, per cent
2015 survey27% 2020 survey38% 2021 survey41%

UBS survey of about 900 recent borrowers, as reported by Mortgage Professional Australia on 15 September 2021. Self-reported answers, not a regulator's count.

## How lenders verify an application today Verification now compares several independent records with each other, and a figure that is wrong in one place tends to disagree with another. **Income documents and the account they are paid into.** Regulatory Guide 209 describes transaction statements as a way to see income patterns and outgoings, and gives an example of a lender using 90 days of statements. A payslip states a net amount; the statement shows what actually arrived, on what date and from whom. If the two differ, the question asks itself. **The employer.** For a new employee on probation, the guide's worked example notes that confirmation from the employer gives the highest certainty about income. **The credit report.** Comprehensive credit reporting changed what a lender sees. According to ASIC's Moneysmart service, a credit report lists each credit product held in the last two years, with the provider, the credit limit and the opening and closing dates. It shows two years of repayment history, including payments not made within 14 days of the due date. Defaults stay for five years. A credit card left off an application is therefore visible on the report with its limit, whether or not it has a balance. **Bank data shared with consent.** The Consumer Data Right, often called open banking, lets a consumer choose to share data such as transaction history with a provider accredited by the ACCC. The government's own description stresses that it is opt-in. Where a borrower agrees, the lender receives the data from the bank itself, not a document the applicant has handled. Regulatory Guide 209 notes that open banking and comprehensive credit reporting may affect what verification steps are reasonable to take. **The documents themselves.** A document can also be examined as a file, for signs that it was altered or generated. Synthetic documents are the subject of a separate guide. ## What happens when a misstatement is found The consequences depend on when the problem surfaces and how serious it is. **Before approval**, the usual outcome is a question, then a decline if the answer does not hold. In a Queensland purchase, a decline close to the finance date can put the contract at risk, which is the subject of the magazine's guide to the finance clause. **After settlement**, the loan contract governs. Home loan terms typically treat a materially wrong statement as a default in its own right, separate from missing a repayment. One published example, ME Bank's home lending terms dated April 2025, lists as a non-monetary default the giving of information that is "materially incorrect or misleading (including by omission)", and also the use of the loan for a purpose the bank has not approved. Under those terms the bank acts only where the default is material, and it must generally give a default notice allowing at least 30 days to fix the problem where it can be fixed. If it is not fixed, the bank can require repayment of everything owed and enforce the mortgage. The same terms set the notice period aside in some cases, one of which is fraud that induced the loan. Other lenders' wording differs, so the borrower's own contract is the document that counts. **In the most serious cases**, a lender may refer the matter to police, and the fraud provisions described earlier come into play. > The figure that gets a loan approved is the figure the household then has to live with. ## Grants, concessions and the Queensland Revenue Office A statement made to a lender is often repeated to the State. A buyer who tells the lender the property will be a home, and then claims the first home owner grant or a home concession on transfer duty, has made the same statement twice. The Queensland Revenue Office says on its compliance page, last updated on 1 April 2026, that it gathers information through data matching, referrals from other agencies and random sampling, and that it accepts reports from the community. For the home concession, its checks focus on whether the buyer moved in, lived there for the required period, and sold or rented the property before that period ended. For the first home owner grant, they focus on the residency requirement. A person who turns out to be ineligible generally has to repay the duty or the grant, plus interest, and penalties may apply. The office's own examples show how much timing matters. In two of them, buyers whose circumstances changed told the office within 28 days; they repaid some duty and interest but no penalty tax. In two others, a grant recipient sold or rented the home within months without telling the office, and had to repay the grant plus a penalty. For grants, the scale of penalties is set out in a public ruling issued on 31 March 2021. The penalty is a percentage of the amount paid in error, up to 100%. For a breach of the honesty obligations in the grants legislation, which forbid knowingly false or misleading statements and documents, the ruling gives three bands: 0% to 10% where reasonable care was taken, 10% to 50% for negligence or inadvertence, and 50% to 100% for intentional disregard. The ruling describes a penalty as an alternative to prosecution, and says no penalty applies where the failure resulted from exceptional circumstances, with coercion or undue influence among its examples. Financial hardship is expressly not one of them. ## When someone else filled in the form Many borrowers never type their own application. A broker, a bank officer or a relative enters the figures, and the borrower signs. This is normal and usually harmless. It becomes a problem when the figures on the form are not the figures the borrower gave. The law described above points in a consistent direction here. A broker who alters or invents information breaches the best interests duty and may commit an offence under section 160D. A lender that could have discovered the truth through reasonable verification cannot rest on the false version. And fraud under the Criminal Code requires dishonesty on the part of the person charged. A borrower who gave accurate information and did not know it had been changed is in a very different position from one who agreed to the change. What that borrower can show afterwards depends on the record: the figures supplied by email, the documents handed over and the copy of the application. ASIC's summary of Chapter 3 adds that, on request, a licensee must be able to give the consumer a written copy of its assessment. Comparing that document with one's own payslips and statements is a direct way to see whether an application reflects what was really provided. ## Where a misled borrower can turn A borrower who believes an intermediary submitted false information, or who was pressed to sign something untrue, has three channels, and they do different jobs.
Three channels and what each one does
  1. The firm's own complaints processRaise it in writing with the broker's business or the lender. A standard complaint must be answered within 30 days.
  2. The Australian Financial Complaints AuthorityA free, independent service for unresolved complaints about home loans and other financial products.
  3. ASICTakes reports of misconduct to detect serious and systemic problems. It does not resolve individual disputes or recover money.
The Australian Financial Complaints Authority, known as AFCA, says its service is free, open to consumers and small businesses, and covers home loans; time limits apply. The 30-day limit for a firm's answer comes from ASIC's dispute resolution standard, which AFCA says applies to complaints received on or after 5 October 2021. ASIC itself says it cannot respond to every report and does not intervene in disputes, give legal advice or recover money for individuals. A report to ASIC is how a pattern across many borrowers comes to light; AFCA is where one borrower's loss is examined. There is also the lender's hardship team, which matters most when the loan is in place and the repayments are too high. AFCA's published timeframes give a firm 21 days to answer a complaint involving financial difficulty. What a lender must do with a hardship request is covered in the magazine's guide to mortgage hardship. Where a default notice has been issued, or the borrower's own signature is on a document that turned out to be untrue, independent legal advice on the particular facts becomes important.