Brokers not tipping off FSA on fraud at lenders
Share
JOHN MALONE, SURPRISED BY FEW TIP-OFFS
Only seven mortgage brokers have reported suspected fraudulent activity by lenders to the Financial Services Authority in the last seven years.
The regulator has maintained records since 2004 and says since then just seven brokers have repor-ted suspected fraud by staff within a lender.
In 2006 the FSA launched its Information From Lenders scheme en-couraging lenders and other firms to report suspected fraud by brokers.
Since then the scheme has generated more than 1,000 alerts about brokers from lenders, but it seems brokers are reluctant to report suspected wrongdoing at lenders.
John Malone, executive chairman of PMS and brokers’ representative on the National Fraud Authority’s mortgage fraud forum, says he is surprised by the low volume of brokers tipping off the FSA.
He says: “One of the big criticisms I am always hearing from brokers is about the behaviour of lenders’ BDMs, particularly between 2002/03 and 2007/08.
“In some instances BDMs showed brokers how to get around lenders’ systems and underwriting criteria for certain applications.”
Malone says he has spoken to brokers who refused cases because they had suspicions about the borrower but later discovered that the borrower went direct to a lender and was accepted.
But Mike Fitzgerald, sales and marketing director at Emba Group, says that he is not surprised by the low number of reports by brokers as he has never suspected lenders’ staff of trying to commit fraud.
He says: “BDMs are trying their hardest to help brokers get their cases accepted but I have not come across any fraudulent behaviour as they would need a corrupt underwriter as well, which I have not encountered.”
A spokesman for the regulator says it has a dedicated section on its small firms website where brokers can find out how to report mortgage fraud.
The FSA also has a whistleblower hotline where brokers can report fraud anonymously.
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
