CML to work with FSA on new fraud measures

Nia Williams

June 23, 2011

The FSA found that “the industry has made progress in getting to grips with this problem over recent years. Defences are now stronger, and the value of cross-industry cooperation is better recognised.”

However it also found that weaknesses in some areas of the mortgage industry could undermine the effectiveness of the sector’s overall efforts to ensure that fraud is identified before it can be perpetrated.

As the FSA has identified, the high incidence of solicitor fraud has led lenders to strengthen checks on their solicitor panels significantly, and intelligence to help lenders have confidence in the integrity of other key professionals in the mortgage process is also vital, according to the CML.

In particular, the CML will look to ensure that it helps the FSA to encourage good engagement in the “Information from Lenders” scheme, and other measures that help to improve collaboration and information sharing within the industry to help stamp out mortgage fraud.

CML head of policy Jackie Bennett commented: “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 £111 million 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.”

The FSA has published three documents relating to financial crime:

  • a consultation paper which proposes a new guide designed to help firms reduce the risk of their business being used to facilitate financial crime;
  • a thematic review of how banks manage their money laundering risks, particularly around their management of high risk customers including Politically Exposed Persons (PEPs), correspondent banking relationships and wire transfer payments; and
  • a thematic review assessing the adequacy of lenders’ systems and controls to detect and prevent mortgage fraud.

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