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Pilot scheme to check borrowers’ income prevented £111m in fraud

A pilot scheme allowing lenders to check applicants’ income against HM Revenue and Customs records has prevented £111m of mortgage fraud, says the regulator.

In October HMRC confirmed that it is on track to launch a scheme by the end of the year allowing lenders to verify the income in a suspected fraudulent mortgage application.

The Financial Services Authority says it piloted the scheme with lenders last year and it helped cut fraud.

Speaking at a British Bankers’ Association conference last week, Margaret Cole, director of enforce-ment and financial crime at the FSA, told delegates: “The power of income verification in combating financial crime was illustrated by a pilot scheme run by HMRC last year.

“This scheme allowed lenders to check whether income details supplied on mortgage applications matched data held by HMRC. During the pilot over £111m worth of mortgage fraud was prevented.”

Cole also revealed that the FSA will be visiting 20 mortgage lenders to check they have adequate anti-fraud systems in place.

She says one reason mortgage fraud became so prevalent during the boom years was because sales targets and incentives led to lending decisions that were not in the long-term interests of lenders.

In extreme cases it saw occasions of bank staff effectively colluding with customers to mislead their employers into granting a mortgage.

Cole says: “As part of the thematic review we are visiting 20 retail lenders to examine whether their internal systems to manage fraud risk are sufficiently robust and to ensure incentives offered to sales people do not undermine efforts to contain fraud.”

The results of this review will be published next year.

The regulator has banned nearly 100 mortgage brokers for failures related to mortgage fraud since 2008 and has imposed penalties of over £2m.




Good luck to Which? for launching a broker service, but I fear it will have a tough job ahead of it. And it’s a shame estate agents are unhappy with brokers as a good relationship between the two can work wonders

India budget: BJP focuses on growth

By Kunal Desai, Head of Indian Equities

With markets kept open on Saturday, finance minister Arun Jaitley delivered a promising budget focused on growth and decentralisation. While many complained about a six-day working week, there was much to be pleased about and the markets rallied in the afternoon to finish in the green.


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