ANZ insists third-party mortgage services are fully compliant

PERPETUAL'S mortgage services arm yesterday rejected claims that its operations do not comply with licensing rules.

It insisted legal work it performed on behalf of financial institutions was being done by qualified lawyers. The company's mortgage services subsidiary, Perpetual Mortgage Services, which provides mortgage processing and settlement services to some of the country's leading lenders, has come under scrutiny from property lawyers and conveyancers following a bungled outsourcing deal with ANZ. Perpetual spokesman Michael Woods yesterday defended the business against the attack from the Australian Institute of Conveyancers (AIC) and the Law Institute of Victoria. "Perpetual Mortgage Services Pty Ltd does not engage in legal practice," Mr Woods said in an emailed statement to BusinessDaily. Start of sidebar. Skip to end of sidebar. Related Coverage Perpetual under fire on ANZ deal Daily Telegraph, 2 days ago ANZ under fire over mortgage settlements Perth Now, 6 days ago Rush to withdraw slowing The Australian, 1 Dec 2009 ANZ reroutes mortgage processing The Australian, 8 Jul 2009 New pain for ANZ to top $300m Herald Sun, 8 Jul 2009 End of sidebar. Return to start of sidebar. "Perpetual provides mortgage processing services for customers. To the extent that these services involve legal work of any kind, it is carried out by . . . qualified Australian lawyers." Thousands of ANZ customers have suffered delays and additional costs on settling property sales since December when ANZ hired Perpetual to settle transactions involving the bank's customers. AIC president Pauline Barrow is concerned that a legal minefield is appearing as more banks outsource settlement and other mortgage functions to third parties such as Perpetual, arguing that they are not licensed to handle legal work on behalf of banks. Ms Barrow believes Perpetual's mortgage servicing arm needs to operate as a registered legal practice or conveyancing business to comply with state laws across Australia. If the AIC's concerns are valid, ANZ's relationship with Perpetual may have implications for its ability to comply with outsourcing standards set by the Australian Prudential Regulation Authority. ANZ spokesman Paul Edwards said the bank's "arrangement with Perpetual is fully compliant with APRA's outsourcing standards." Ms Barrow said conveyancers who were required to adhere to licensing rules were concerned about dealing with organisations that were not licensed. "We're having to deal with a third party when we should be dealing directly with the bank," she said. Mr Woods acknowledged that many ANZ customers had suffered as a result of problems with the new settlements systems since December. "Perpetual is aware that as a result of changes made by ANZ to centralise its mortgage processing, which included the engagement of Perpetual to provide mortgage processing services, some ANZ customers have experienced delay inconvenience," he stated in the email.

"ANZ has apologised for the difficulties. Perpetual is working with ANZ as part of the bank's program to improve its settlement performance and is confident these initial service issues are being quickly overcome."

Herald Sun

George Lekakis

From:Herald Sun

March 16, 2010 9:57AM

Lawyers line up ANZ

VICTORIAN property lawyers are demanding an urgent overhaul of ANZ's mortgage procedures following the bank's recent move to outsource home loan settlement functions to Perpetual.

In a damning letter sent to the bank last month, the Law Institute of Victoria's acting president Caroline Counsel highlights deficiencies in ANZ mortgage processes which she claims have "substantially undermined" the certainty of property sales.

The bank has since apologised to the LIV.

In the February 4 letter leaked to BusinessDaily, Ms Counsel states that ANZ and Perpetual have committed only limited resources to booking property settlements which has led to confusion and frustration for conveyancing lawyers and their clients.

"Law Institute of Victoria members have reported that there have been instances when the Perpetual representative has not attended settlement at the allocated time," Ms Counsel told ANZ in the letter.

Related Coverage

• Perpetual rejects criticismHerald Sun, 1 day ago
• Perpetual under fire on ANZ dealDaily Telegraph, 2 days ago
• Plan to reduce mortgage expensesAustralian IT, 14 Sep 2009
• PS chief linked to $50m failureThe Australian, 20 Aug 2009
• Opes Prime creditors in $453m settlementAdelaide Now, 24 Jul 2009

"Settlement in such cases has, of course, not occurred at the allocated time, and this has necessitated the inconvenience of re-booking settlement."

ANZ outsourced settlement responsibilities to Perpetual Mortgage Services last year as part of a wider effort to bring its mortgage administration and settlement systems in line with industry standards.

However, the move has been disastrous with communication problems between the bank and Perpetual leading to delays for home buyers and sellers completing transactions.

The institute's list of complaints include:

SALE failures caused by Perpetual not meeting settlement deadlines.

"UNDULY long" waiting times for lawyers seeking information over the phone from the bank and Perpetual.

FAILURE by Perpetual to provide details of payments due by property buyers within 48 hours of agreed settlement dates.

Ms Counsel told the bank that Perpetual's inability to provide payout numbers before settlement days meant that settlements had to be postponed in many cases because there was not enough time for cheques to be drawn by purchasers.

"When settlements fail as a result of ANZ's processes, there are additional financial and emotional burdens imposed on parties," Ms Counsel told the bank in the letter.

"The LIV urges ANZ to address settlement process issues, as they substantially undermine the certainty of transactions for parties."

In a replying letter sent on February 24, ANZ's head of mortgages, Michael Bock, acknowledged that the deficient settlement procedures had caused inconvenience for solicitors and parties involved in property transactions.

"It is clear from feedback from the profession that the changes we introduced to our settlements process have caused frustration and, in certain circumstances, significant inconvenience for some solicitors, conveyancers and clients - and we sincerely apologise," Mr Bock told the LIV.

"We are working hard to fix these problems ... We understand your concerns, and ANZ is committed to making the necessary changes to ensure we meet your needs and clients' expectations for timely and efficient settlement of all purchases and discharges."

Mr Bock stated that ANZ had established a special team of senior executives to drive improvements to the group's mortgage processes.

The urgent change program will try to simplify settlement procedures by increasing phone contact staff and investment in new technology.

LIV chief executive Michael Brett-Young said conveyancing solicitors also experienced settlement issues with other banks but the problems were more profound at ANZ.

"We've had more complaints from our conveyancing solicitors about ANZ and we are confident that the other banks are meeting requirements to achieve timely and smooth settlements for clients," he said yesterday.

A Perpetual spokesman declined to comment on the LIV's concerns about its performance under the outsourcing deal with ANZ.

George Lekakis

From:Herald Sun

March 10, 2010

Perpetual flawed process impacts 3 banks

Three more banks could face investor concern over flawed mortgage outsourcing deals with Perpetual Ltd that give rise to confusion over who has the legal authority to complete the transactions.

An analyst says that Perpetual could lose as much as 10 per cent of its revenue if all three banks, National Australia Bank, AMP Bank Ltd and Bendigo and Adelaide Bank - in addition to ANZ Banking Group Ltd - drop their business with the fund manager over the flawed contracts.

Perpetual on Monday confirmed that National Australia Bank's (NAB) HomeSide mortgage lending unit, AMP Bank and Bendigo and Adelaide Bank outsourced the processing of mortgage applications to its mortgage services business.

Credit Suisse analyst Arjan Van Veen said in the unlikely event the banks broke their outsourcing contracts with Perpetual over the issue, Perpetual's total revenue would drop by 10 per cent.

Perpetual spokesman Michael Woods on Monday confirmed to AAP that HomeSide, AMP Bank and Bendigo and Adelaide had business relationships regarding mortgage services with each of the three lenders.

Mr Woods said Perpetual has been in talks with all four banks over claims made by the Australian Institute of Conveyancers (AIC) that Perpetual's staff are not legally qualified to act for banks for the purpose of completing mortgage settlements.

"To the limited extent, these services in terms of what we're providing to the ANZ that involve legal work of any kind, it is carried out by appropriately qualified Australian legal practitioners," he said in an interview on Monday.

Mr Woods was responding to concerns voiced by the AIC president Pauline Barrow that the outsourcing deals had caused confusion among property lawyers and conveyancers over whether banks or third-party administrators like Perpetual have legal authority to complete mortgage settlements.

"If they're acting for the ANZ then we need to know under what authority do they act," Ms Barrow told AAP.

"Is it an agency, or (do) they act under Power of Attorney? Where does the risk lie?

We don't know how that role is being performed."

"Whilst we're dealing directly with ANZ, then the risk remains with ANZ. But whilst we're dealing with a third party we have to question whether or not they have the ability to undertake the work they're doing because they're in a settlement process."

Ms Barrow said HomeSide, AMP Bank and Bendigo and Adelaide Bank had outsourced mortgage processing to Perpetual while other banks had outsourced the back office function to SAI Global's Espreon settlement services and brokerage unit.

"(They) have expanded the work they undertake to include legal work, (but) we're not sure whether or not they're working outside any acts or legislation."

Commonwealth Bank and Westpac Banking Corporation process mortgage settlements in-house, she said.

Ms Barrow said the banks involved in the dispute had not formerly consulted the AIC on the processing changes and were not following chain of title, which caused significant delays in mortgage settlements through faulty documentation.

NAB spokeswoman Gillian Griffiths declined to comment on the matter, while AMP Bank's Amanda Wallace confirmed it outsourced new mortgage preparation and settlements to Perpetual and was happy with its service.

"Like any outsourcing deal, we have service standards in place that we continually monitor and we're happy with the level of service Perpetual is delivering," she said.

"We're not seeing any issues."

Bendigo and Adelaide Bank and SAI Global did not respond to calls.

Source ninemsn

By Alison Bell