Lenders have scrapped plans to launch a specialised mortgage fraud unit within the City of London Police.
Last year the Council of Mortgage Lenders held talks with its members, the National Fraud Authority and the City of London Police about funding a unit with the aim of targeting mortgage fraudsters.
This move was prompted by the revelations that one police force was no longer investigating mortgage fraud because of cuts to funding.
In October 2010 a Comprehensive Spending Review pledge was to cut 20% of police spending by 2015.
The Association of British Insurers backed a similar scheme, launching the Insurance Fraud Enforcement department in January this year.
But lenders opted not to create a mortgage unit, deciding their resources would be better targeted at their own systems.
A spokesman for the CML says the broad conclusion of discussions was that lenders would prefer to prevent fraud than
He says: “It was decided it is better to use resources to stop lenders being victims rather than channel them to the police to prosecute criminals.
“Obviously lenders would favour prosecutions but that focusses on fraud that has taken place rather than prevention. It is unlikely we will be taking the proposals any further.”
John Malone, executive chairman of PMS, says: “CML members have different priorities so trying to build a consensus was never going to be straightforward. The requirements of, say, a medium-sized building society and a huge lender are different.”
Bill Warren, managing director of Bill Warren Compliance, believes the decision makes sense for lenders in light of regulatory pressure to improve their systems.
He says: “There is more regulatory emphasis on lenders protecting themselves than ever before.
“I would go down the same route as they have more control over protecting themselves rather than just dishing money out to the police.”
Brian Pitt, director of Rockstead, also agrees with lenders’ position as they are better placed to tackle mortgage fraud than the police.
He says: “Prevention is always better than cure so it makes sense. There have never been too many fraud cases that make it to court with the police pursuing them vigorously.
“The big commercial cases may have secured prosecutions but for day-to-day fraud, lenders are better dealing with it themselves.”