Brokers are urged to inform on each other if they suspect wrong doing

15 August 2011 | By Natalie Thomas

The Financial Services Authority is calling on brokers to blow the whistle on other brokers they suspect of fraud.

A Freedom of Information request by Mortgage Strategy reveals that the regulator has received 181 reports of suspected broker fraud from lenders since it launched its Information from Lenders scheme in 2006.

Reports peaked in 2009 with 55 reported cases and so far this year it has received 24.

The regulator says it is pleased with the response from lenders but would like to see more brokers report other brokers, either online or over the telephone.

Tom Spender, head of retail enforcement at the FSA, says: “Many of our mortgage fraud cases have started out as referrals via the Information from Lenders scheme, but we are keen for more intermediaries to report wrongdoing to us as well.

“There is a mechanism in place for this, similar to the IFL scheme, but to date there have been few reports from the broker community.”
Similarly brokers are also failing to report suspected fraud by lenders.

In April Mortgage Strategy revealed that only seven mortgage brokers have reported suspected fraudulent activity by lenders to the FSA in the past seven years.

Last week the FSA fined and banned Michael Lewis, trading as Lewis Partnership, and based in Gillingham, Kent, for submitting false information on mortgage applications.

He has been fined £106,499 by the FSA for knowingly taking part in mortgage fraud.

An investigation by the FSA found that Lewis had knowingly submitted mortgage applications in his name and his clients’ names that contained false and misleading information. These applications included inflated incomes and false employment details.

The regulator revealed that Lewis also acquired, certified as a true copy of the original and provided to a lender, a falsified payslip for one of his clients.

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