The Council of Mortgage Lenders says it will work with the Financial Services Authority and lenders to tackle fraud after criticisms in the FSA’s thematic review of lenders’ anti-fraud systems.
In its thematic review the regulator criticised lenders’ underwriting teams as under qualified and overstretched, claimed their bonus structures can encourage fraud and that broker supervision must be improved.
But the CML welcomed the FSA’s recognition of improvements in lenders anti-fraud systems.
The FSA says that defences are stronger now and the value of cross-industry cooperation is better recognised.
The CML says that high levels of solicitor fraud have led lenders to strengthen checks on their solicitor panels significantly.
It says that intelligence to help lenders have confidence in the integrity of other key professionals in the mortgage process is also vital.
In particular, the CML will look to ensure that it helps the FSA to encourage good engagement in the Information from Lenders scheme.
It also supports other measures that help to improve collaboration and information sharing within the industry to help stamp out mortgage fraud.
Jackie Bennett, head of policy at the CML, says: “Prevention is better than cure, and information systems that help lenders to spot potential fraud play an important role.
“As the FSA points out, the pilot scheme from HM Revenue & Customs that enabled lenders to cross-check prospective applicants’ income details was able to stop £111m of suspect lending. We look forward to the rollout of a fully-fleshed version of this scheme for all lenders soon.”
“We are working extensively with the National Fraud Authority, the police, and lenders, to ensure that the right resources are in place to investigate and prosecute fraud.
“Recent successful convictions should leave fraudsters in no doubt that the industry is committed to pursuing them, and that for perpetrators a jail term is a serious prospect.”