Mortgage fraud accounts for 18% of all fraud
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UK fraud broke the £2bn barrier in 2009 for the first time, with mortgage fraud accounting for 18% of all fraud, shows research from BDO LLP.
BDO LLP, one of the UK’s largest teams of specialist fraud investigators says the financial sector continues to head from bad to worse, with a massive 70% increase on last year’s figures to £1.340bn.
Mortgage fraud alone accounted for 18% of all reported fraud this year and accounts for 27% of all fraud in the finance and insurance sector.
These frauds typically work through a large loan being taken out on an overvalued property, with a crooked buyer in collusion with a corrupt valuer and/or lawyer.
When these frauds hit here, they hit large, since the same team will work on many properties in succession.
Fraud against the finance sector now accounts for 64% of all reported fraud by value. In its experience well over 90% of larger frauds do not get reported to authorities.
The amount lost by businesses and the public sector to larger frauds increased last year by a startling 76% during the recession, with both the number and size of frauds increasing dramatically.
BDO LLP says this 76% rise is just a precursor of things to come, and warns that annual reported corporate fraud could be as high as £5bn in a couple of years, as more fraud is discovered – both through management being focussed by the recession on questioning costs, and because tighter cashflow and credit makes fraud harder to hide.
Simon P. Bevan, head of Fraud at BDO LLP,says: “2009 saw the steepest increase since our report began seven years ago, with the average value of each fraud now over £5m compared to £1.8m in 2003.
“Based on my experience of the two previous recessions, I expect that reported fraud will treble over the next two years. There has always been a lag effect, with reported fraud continuing to rise for at least a couple of years after businesses start to come out of the recession.”
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Readers' comments (1)
Glen McKeown | 11 Jan 2010 3:29 pm
Just what is this report and BDO trying to say?
That mortgage fraud is significant or insignificant?
The figures will depend on the total mortgage market, but I estimate that mortgage fraud is running at less than 0.2% of the mortgage market.
I would expect errors and omissions to run at that sort of level, so we can assume that there is actually a remarkably low level of fraud - which means that the FSAs crusade is rather pathetic. By all means police fraud, but lets have a sense of perspective.
If £360m was all that had been lost by any of the Banks individually we wouldn't be in the mess we are. Fraud is costing significantly less than poor business decisions.
Has anyone heard about a crusade by the FSA against bad banking decisions?
Can we please concentrate resources were they make a real difference - I know that won't get Margaret Cole her Dameship - but it may help the rest of the country.
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