Over recent months it seems that mortgage fraud related activity has become rife, and amongst the problems that have arisen from the global credit card crunch and the lack of available mortgages is the issue of some brokers putting falsified information on the applications of customers in order to increase the chances of getting mortgage loans. A number of brokers have already been fined or banned for this sort of activity in the past few months alone, and now the Financial Services Authority has demanded that something is done about the problem.
Officials from the FSA have told lenders that they need to increase and improve their defences when it comes to fraudulent applications, adding that the FSA is already targeting around two hundred broker firms to ensure that proper checks and procedures are in place. The FSA is concerned that many lenders may be failing to properly protect themselves against this sort of fraudulent activity.
Philip Robinson, director of the FSA’s financial crime and intelligence division, said: “The FSA continues to take very seriously the question of whether lenders’ systems and controls for dealing with mortgage fraud are proportionate to the risk. We are likely to take particular note of cases where weaknesses in due diligence and customer checks – or in outsourced relationships with third parties – may have contributed to a heightened mortgage fraud risk.”
The move was welcomed by the Council of Mortgage Lenders, and on official from the CML said: “People may not think of lenders as victims of crime, but unless fraudsters are tackled then honest customers are the ones who end up paying more. We expect that even more lenders will now participate in the voluntary initiative designed to identify and investigate broker fraud.”
