Guy Mendelson, general manager of small business banking for the Australia and New Zealand Banking Group, was under fire in the latest episode of the Hayne royal commission into banking misconduct for legacy problems in the bank's former Esanda business. The Esanda motor vehicle finance business, was sold to Macquarie Bank for A$8.2 billion in October 2015, a deal that Mendelson said was not completed until about April 2016 - just before he arrived in that business.Nevertheless, counsel-assisting Albert Dinelli pressed on, running through some of Esanda's worst and most recent excesses before being sold: on 18 January 2018 ASIC commenced a civil penalty proceeding in the Federal Court against ANZ for breaches of the National Credit Act in respect of the Esanda business and Esanda agreed to remediate more than 70 customers for car loans provided by Esanda; between 2011 and 2014 the broker had arranged loans for customers who did not meet Esanda's lending criteria.In addition, ASIC identified lending criteria undermined by the practice of writing the application in the name of an individual who did not own or have possession of the vehicle, but who agreed to guarantee the loan.The broker also sold add-on products such as insurance and warrantees to some borrowers without their knowledge or consent.  The premiums inflated the amount they borrowed, thus increasing the overall amount of interest paid by borrowers.Mendelson confirmed that ANZ currently receives consumer motor vehicle finance applications from two primary sources, with a clear majority from third party intermediaries (about 85 per cent) and the balance through the call centre.He then explained that ANZ has set up an online only learning module for brokers, as it identified this as a key risk.  Mendelson said it took approximately 55 minutes to complete whole test, so it was  "quite an impost on the brokers".  "We got quite a bit of pushback," he said.Mendelson was keen to emphasise that ANZ has continued to "enhance" its fraud detection system, noting: "We had 50,000 applications last year.  … Fraud in general for the bank is a major focus area, be it cyber fraud, be it payslip fraud, be it bank statement fraud.  "We're [even] seeing things like salary staging, which is where people who are trying to defraud the bank will set up bank accounts and create legitimate statements, putting money in and out, and then presenting those." Nonetheless, according to the ANZ executive, the level of fraud was now just 0.1 per cent (50 out of 50,000 applications) or, at worst, no greater than 100.Mendelson also took the hearing through the previous commission structure, which he said had been overhauled. The starting point was an interest rate that varied from six to 16 per cent based on the borrower's perceived risk. Added to this, the dealer, in his or her discretion, was able to negotiate with the customer to impose - or "flex" - a further four to eight per cent as an "over".  "It was anywhere from 40 to 60 per cent