Lenders lack understanding that remuneration based solely on sales targets encourages mortgage fraud, the Financial Services Authority claims.
Speaking at the FSA’s Financial Crime Conference today, Edna Young, strategy specialist for financial crime and intelligence at the FSA, says the regulator’s Mortgage Fraud Thematic Review exposed the fact that the only driver of sales volumes at some lenders is bonuses.
She says in a number of cases, staff could earn very large bonuses for meeting sales targets – in one case an employee could earn a maximum of 775% of his or salary.
Young also points out there is no claw back of bonuses for mortgages that are later found to be fraudulent.
She says: “There is a lack of understanding that staff remuneration based solely on sales could encourage staff to turn a blind eye to fraudulent activity, or even incentivise staff to commit fraud themselves.”