CML offers funding for HMRC income scheme
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LENDER TRADE BODY: PILOT SCHEME STOPPED FRAUD TOTALLING £111M
The Council of Mortgage Lenders has offered to fund the re-introduction of an income verification scheme that would see HM Revenue & Customs share data with lenders, Mortgage Strategy understands.
It was revealed in last week’s Budget that HMRC and lenders are to begin discussions about establishing a scheme that would give lenders access to tax returns to verify applicants’ income when they apply for a mortgage.
But it has emerged that a pilot income verification scheme between HMRC and several lenders has been underway since 2007, but was stopped in January this year.
Mortgage Strategy has spoken to a source about the contents of an HMRC letter sent to key financial services firms.
The letter says: “The income verification scheme allows lenders to approach HMRC for help with verifying income details provided by applicants when lenders have suspicions of fraud.
“This gives HMRC valuable information regarding what potential borrowers say about their income and who may be committing tax fraud.”
The letter adds: “The CML has estimated that the pilot prevented private sector frauds totalling £111m and has made an offer on behalf of its members to fund the service.”
The CML says the pilot started informally with several lenders, with more participating as it progressed.
A spokesman for the CML says: “We have an open mind about funding. We can see the benefits of in-come verification for our members in fraud detection and we understand the pressures on the government’s finances. We haven’t got a formula in mind for its funding, but are open to discussions.”
Robert Sinclair, director of the Association of Mortgage Intermediaries, questions why the pilot was stopped.
He says: “As a fraud prevention tool it had been productive for all parties. We look forward to working with the lending community to ensure brokers can benefit from it.”
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Readers' comments (2)
Jason | 30 Mar 2010 10:02 am
One can only wonder if this really will work or is this another drum beating excercise after the tide has swept?
We're in a recession zone (albeit coming out but by what margin?), point being the crooks have done their dirty, the economy is out of money, most of my clients dont have a job and genuine first timers cant get one as their income and deposits are not enough.
To add more glitter to this matter, Councils will be off loading their housing stocks to private companies to manage social housing needs. A writting on the wall I wonder or does the whole government sector not get it still?
Roles of governmen; law, order, run economy, create jobs, help the vunerable.
From my take, both installations that now are about to have their rat race in May, have failed in these duties. Lady Thatcher started it, Mr Brown completed it. Where is our manufacturing and why have we become so lazy. We embarked on Financial strength and even there, we've been beaten.
My point and prayer is for a level headed working class Prime minister to help us get back on our feet, the current lot I wouldnt trust anymore than Saddam - they're beating us in a different way.
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Rory Joseph | 1 Apr 2010 4:37 pm
I welcome this move. It will mean that the FSA can relax, accepting that fast-track is exactly that, rather than being self-certification by another name; lenders can start lending with confidence and hopefully become a bit less paranoid in their lending criteria and more aggressive with their pricing. The losers will be those who are immersed in the cash economy - builders, plumbers and the like, as is unfortunately, so often the way. However, as HMRC will undoubtedly say, if you are not willing to pay tax on your earnings, you can't really expect them to be used to borrow against.
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