Combatting mortgage fraud

Bob Hunt

September 20, 2019

Bob Hunt Paradigm

Bob Hunt (pictured), chief executive of Paradigm Mortgage Services

There will, I suspect, be many within the mortgage market who would like to eradicate some of the more dubious practices that can take place.

However, the most serious ‘dubious practice’ is attempted mortgage fraud – I say attempted because, from my perspective, our sector has a pretty good record in terms of being able to prise out the criminals from the genuine borrowers, and as a sector we probably are more clued up now in terms of the ways in which fraudsters might want to carry out their activities, than we have ever been.

That said, unfortunately we can be fallible and that’s one of the reasons why we’ve just launched a new eBook designed to help all advisory firms identify, highlight and stop at source, attempts to defraud the market, consumers and the entire industry.

‘Stopping at source’ is of course particularly pertinent because many of the high-profile frauds we have seen completed have done so because the checking at the outset wasn’t strong enough and (dare I say) certain individuals took their eye off the ball, especially when alarm bells should clearly have been ringing.

While we might like to have a sector, which was 100% fraud-combative, that is perhaps unlikely but we should aspire to get as near as possible to it. Indeed, in a true sense, we might argue that the system doesn’t always work in our favour in combatting fraud, or that it is incredibly difficult to stop cases where it’s essentially an ‘inside job’ with perhaps another adviser or solicitor in on the fraud.

However, one ‘successful’ case of fraud is obviously one too many, especially when it could mean hundreds of thousands of pounds being taken from a client. Lest we forget that the large sums of money involved in house purchase/remortgaging are always likely to make it a target for the criminals, whatever the level of sophistication (or otherwise) involved.

And that latter point is also an important one to remember. For the most part, those attempting property/mortgage fraud are not exactly using techniques which make it impossible to see through them. If anything, they tend to be chancers, hoping for a chink in the armour, or someone not really doing their job, especially when it comes to checking ID or hacking email accounts, and the like.

Checking the ID of clients is such a natural part of the job that it shouldn’t be overlooked but, given the reliance on paper-based ID checks, are we really confident that we have a system in place which is able to check the veracity of these IDs?

I’ve been reading recently about the government’s consultation on Digital Identity and, given the importance of this to our sector, it would be nice to think that not so far in the future we have a one-stop government shop when it comes to checking ID which will give us all the surety we need in determining the people in front of us are exactly who they say they are.

The idea looks like catching on, and I know there has been talk about Land Registry having a more formal role to play here. What we obviously need, is a digital system which gives everyone peace of mind and ensures the fraudsters’ attempts at using paper ID to defraud can never work. Go online and you’ll quickly find hundreds of sites which can give you paper-based bank accounts or other documentation, which might be used to perpetrate fraud.

Added to this, we need to have much more of a focus on the various email scams that are ongoing – if our email systems are not secure, then this is an open door in which the criminals will quite freely walk. How many mortgage frauds get through because of emails sent to clients purporting to be the conveyancer? Even in this day and age, some clients will still send through huge sums of money to bank account details which have been changed from those they were initially given.

All in all, there is clearly much work to do, and advisers should ensure they are standing firmly in the front line when it comes to ensuring their clients (and their own businesses) are not subject to the huge distress that being a victim of such crimes are bound to cause.

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