View more on these topics

How to cut mortgage fraud risk

Recent figures from Financial Fraud Action UK revealed a financial scam was committed, on average, every 15 seconds during the first six months of 2016, says Roy Armitage, head of credit at Lendinvest.

That represents a 53 per cent rise year-on-year, with these scams coming in all shapes and sizes. Furthermore, a staggering 56 per cent of UK organisations have been affected by fraud in some way, and it is one of the biggest risk concerns facing board members.

The mortgage market is no stranger to financial frauds. Recent years have seen fraudsters raise their game in identifying weak spots within the transaction chain, so lenders are duty bound to do more in order to keep them at bay.

Lenders face a tricky balancing act between implementing effective anti-fraud measures, which address concerns about the risk of identity theft and online fraud, while still offering a frictionless customer experience.

But what can we do in practice to reduce the fraud risks that face us?

Awareness, data and having the right systems in place is a crucial tool in the fight against financial services fraud. At Lendinvest we are members of CIFAS, a fraud prevention system.

It gives firms access to the fraud data collected by government agencies, the police and other industry firms.

That membership is a supplement to our existing use of SIRA (Synetics) and other data providers which give us enhanced insight to ID verification, including Sanctions, PEP and Adverse Media. Furthermore we train our underwriters on the risks fraud provides.

These data feeds, along with Equifax Insight credit data, are a powerful resource, supplying us with a range of data on mortgage applicants and how accurate the information they have supplied truly is.

It is crucial that lenders engage with these data feeds and add in their own information in a structured way. The richer those structured data feeds become, the more they benefit everyone across the industry.

However, the data can only do so much. There is no single algorithm that can look over that data and then decide if the application is credible and transparent. It’s also vital therefore to employ quality and experienced underwriters who know how to cast a truly critical eye over all application data.

While Lendinvest is a lender that sees the potential improvements technology can bring to the mortgage market, we have always been clear that technology must be there to support manual decision-making, rather than replace it. Technology for technology’s sake must be avoided. Instead, a risk-based approach should be adopted.

In the short-term finance world, some of the attempted fraud focuses around buying the property at under value for reasons which aren’t transparent or at arm’s length. There can be good reasons for securing a property for less than it is worth, of course, but there are also cases where borrowers attempt to keep lenders in the dark about the true nature of the transaction.

Lendinvest’s core principles focus on transparency and disclosure. We perceive any form of non-disclosure as a form of fraud and do not tolerate it.

It comes down to each individual lender, and the checks they carry out. If you want to build a sustainable and scalable business, then you need to demonstrate in word and deed that you are lending responsibly.

Fail to take that responsibility seriously, and there will no shortage of fraudsters ready to take advantage.


‘Redfern is welcome but avoid hasty response’

Mortgage experts have backed the findings of a political review into declining homeownership but warned the Government against hasty action that might harm the mortgage market. The Redfern Review calls for the creation of an independent housing commission to increase the number of homes being built. The review recommends that the commission champion the cause […]

HM Land Registry to remain in public sector

The Government will retain HM Land Registry in the public sector and focus on it becoming a “more digital data-driven registration business”. In the Autumn Statement today, Chancellor Phillip Hammond announced that “modernisation will maximize the value of HM Land Registry to the economy”, which should be completed without a need for significant Exchequer investment. […]

Your Views

Will the Autumn Statement give us a housing policy that is worth having? Lenders and brokers alike have been expressing their frustration at the lack of direction in government housing policy… The lack of a clear, structured housing policy has been an elephant in the room for some time. Successive administrations have made pledges to […]


Housing white paper to be published in January

A hotly-awaited Government white paper on housing will be published in January, according to Communities Secretary Sajid Javid. The paper will lay out Goverment plans on tackling the housing crisis. It will also give details on one million new homes that will be built by 2020. Speaking in the House of Commons yesterday, Javid said: […]

Could Proptech revolutionise construction?

By Rebecca Murphy, relationship manager, LendInvest  The construction sector offers enormous potential when considering the implication emerging technologies could have on both existing processes and final results. While the completion of an entirely 3D-printed office block may be ‘sexier’ news than a new smart toolbelt that tracks the wearer’s location on site, each area of development […]


News and expert analysis straight to your inbox

Sign up

Why register with Mortgage Strategy?

Mortgage Strategy continues to be the market-leading B2B mortgage publication in the UK, and provides trusted, independent insight with the aim of helping, promoting and analysing the latest developments for mortgage professionals.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Mortgage Strategy Events
Be the first to hear about our industry leading conferences, awards, webinars and more.

Research and insight
Take part in and see the results of Mortgage Strategy's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now