Detecting and preventing fraud is a notoriously thorny theme. This is all the more apparent in the current economy where fierce competition is driving down margins and causing many to be tempted by “get rich quick” options.
While illegal practices are becoming widespread, it’s not just detecting fraud that is the issue, but finding out who is responsible.
Perhaps it reflects today’s blame culture, but when the Financial Services Authority held its Financial Crime Conference earlier this year, the involvement of brokers in fraudulent behaviour was singled out.
However, the follow-up document, Mortgage Fraud Against Lenders, highlighted the involvement of solicitors. Add to this the fact that lenders say 60% of fraud involves third parties and that 25% can be traced to conveyancing and it is clear brokers aren’t the only culprits.
Through a thematic review, the FSA established that lenders need to be more collaborative when it comes to sharing information.
This means any intermediary involved in or suspected of fraudulent behaviour will be reported to the FSA, resulting in enforcement, fines and even banning orders.
Now that the FSA is cracking down on mortgage fraud, brokers, lenders and conveyancers must stop passing the buck, accept they have made mistakes and make sure they have processes in place to eradicate this criminal activity.