Short-term lenders are ‘soft targets’
Speaking at today’s Association of Short Term Lenders Conference 2015, Jonathan Newman, senior partner at Brightstone Law, told firms to put fraud prevention at the centre of their business model – adding that identity fraud represents the greatest threat.
Ominously he admitted that nobody really knows how big a problem fraud is within the industry as lenders aren’t keen to publish data on the subject.
He said: “When The Law Society flags up non-bank lenders they mean you guys because they think that the fraudsters perceive the short-term lenders as being soft targets with softer underwriting processes and lacking in due diligence.”
Newman ran through common “warning signs” that lenders should look out for: The borrower may be geographically far away from the property and the solicitor, while he/she may be acting overly anxious or act detached from the transaction.
In order to beat fraud he said firms must instil a culture of fraud prevention and have an experienced team – while they should remunerate employees who catch fraudsters in the act.
He added: “They all say that their members should have appropriate remuneration structures and these should incentivise detection of fraud but not encourage overlooking fraud risk to achieve sales.”