Focus on fraud shifts to lenders
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The Financial Services Authority is to visit mortgage lenders in the next couple of months to check that their systems are robust enough to detect fraud.
This move follows a report from the National Fraud Authority and the Metropolitan Police last week that reveals that the regulator intends to shift its focus from brokers to lenders.
The report highlights a range of key vulnerabilities including corruption or negligence among key professionals involved in the mortgage and conveyancing process, and notes that weaknesses in lenders’ systems and controls are being exploited by fraudsters.
The NFA has launched a Mort-gage Fraud Forum that aims to develop an understanding of the tactics fraudsters are using. The forum includes lenders, solicitors, surveyors and trade bodies.
The NFA estimates that the annual value of mortgage fraud is £1bn and that action taken by the Solicitors Regulation Authority against solicitors who facilitate mortgage and other property fraud has so far saved lenders around £20m.
Last week the Council of Mort-gage Lenders called for a compre-hensive review of the way solicitors are regulated to help combat fraudulent activities.
The trade body opposes proposals for reform put forward by the SRA, which is campaign-ing for a principles-based approach to regulation.
The CML says if confidence in the regulation of solicitors is not restored, lenders are likely to scale down their panels and not accept firms until hey have a proven record.
In the latest issue of its News & Views newsletter, the CML says: “We accept that most solicitors pro-vide a competent, honest and reliable service.
“But the reputation of the industry has been tarnished by a minority of firms that do not uphold the same standards.”
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