Spotting dodgy dealings in the mortgage chain

22 March 2010

You will have read about the many fines and bans imposed on rogue brokers for mortgage fraud in the past two years.

Despite the reduced levels of lending in the recession fraud is still an important issue and we continue to work with mortgage lenders and the police to fight this type of crime.

A dozen banned mortgage brokers are currently under criminal investigation by police forces around the country.

They were picked up using our Information From Lenders scheme, which allows lenders to report suspected frauds to us in a convenient manner.

In the past four years IFL has generated some 700 alerts about brokers and we have opened 100 enforcement cases.

This has resulted in 80 mortgage brokers being banned and fines of more than £1m being imposed.

We normally refer brokers who benefit from the proceeds of mortgage fraud to the police as they pose the greatest risk to the financial system.

But we consider each case individually and work with law enforcement agencies so that as many dishonest brokers as possible can be brought to justice as effectively as possible.

Below are two examples of cases involving brokers in which we have engaged the police.

We have a considerable amount of intelligence on brokers we suspect of being mixed up in fraud

Mr A was banned in 2009. He and his wife were arrested along with several accountants. Numerous properties belonging to Mr A were identified as being the proceeds of crime.

He is now the subject of a restraint order and the fraud he was involved in is believed to have been worth several million pounds.

Mr B was banned in 2008. After we referred our case to the police he was charged with money laundering, deception and obtaining pecuniary advantage.

Several search warrants were executed, including at solicitors’ premises. During the police investigation Mr B was arrested several times for further financial crime-related offence including possessing counterfeit credit cards and using counterfeit cheques.

Mr B was found to have obtained numerous properties using false details.

His assets have been restrained pending the outcome of his trial and the extent of his criminal activities may run to tens of millions of pounds.

Following the success of the IFL scheme we now have a considerable amount of intelligence on brokers we suspect of being involved in mortgage fraud.

Their misconduct ranges from poor financial crime systems and controls to using Financial Services Authority authorisation solely to commit mortgage fraud.

In some cases, multimillion pound frauds have been uncovered as a result of IFL referrals.

So as you can see, we remain committed to making the mortgage market a more hostile place for criminals to operate in.

At the same time we expect honest brokers to be vigilant to the threat financial criminals pose to their firms.

You need to be clear what your responsibilities are, be able to recognise mortgage fraud when it is going on and have high quality systems in place to check customers and employees. You can find more information on all this on our website.

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