SPECIAL FEATURE: Fraud remains a constant threat
Despite the best efforts of all parties involved in the mortgage and house-buying process to eradicate it, fraud remains a threat that must be constantly guarded against.
While developments in technology and heightened vigilance may counter some malpractice, fraudsters also develop increasingly sophisticated ways of slipping through the net.
The economic climate has not helped things either – where individuals may have turned to fraudulent practice in the past for their own financial gain, it may now be the case that a small number are driven by desperation as their housing dreams appear further away than ever.
Given this situation, it has been encouraging to see the Solicitors Regulation Authority (SRA) doing its bit to try and reduce the risk of mortgage fraud.
It is in the process of updating its draft Supervision and Enforcement Strategy for Conveyancing first published in Q2 2011 to help bring conveyancers up to speed.
While most of us have our own procedures in place, it is always encouraging to get a steer on these things from the powers that be.
The regulator has revealed that its main focus will be on areas which can lead to financial loss, such as the holding of client money and the use of undertakings.
It is believed to be considering amendments to elements of the underlying conveyancing process in order to reduce the extent to which firms need to hold client money and to enhance the safety of such funds.
At first glance, this would seem to be a vaguely similar concept to the deposit protection schemes that safeguard rental tenants’ bonds and anything that adds an extra degree of protection and reassurance – for the customer and the conveyancer – can only be a good thing.
The fact that the SRA is working with partners such as the Law Society, the Council of Mortgage Lenders and the Land Registry in conducting this review increases the chances of a more joined-up thought process and also helps keep all stakeholders on the right page in terms of the latest tactics being adopted by the fraudsters.
The SRA has already visited 100 firms to look at the risks they face during conveyancing work and is analysing the feedback it collated in order to ascertain any patterns or trends.
As is always the case with any possible new legislation around fraud, it is testament to the fact that the industry wishes to do something about it, whilst at the same time not absolving individual parties of their responsibilities to make the necessary checks at all stages of the process.
Mortgage brokers must continue to carry out checks not just on the clients they deal with and the applications they subsequently process, but also on the law firms they refer their clients to.