MIp16-17_0909.qxd 25/8/09 18:26 Page 21
Mortgage fraud | 17
among key participants in So how can you stop yourself becoming a circle6Consider asking for wage slips and bank
the mortgage market to victim of fraud? All FSA-regulated firms have a statements as part of your sales process
toughen the industry’s r irrespective of whether the lender requires
defences”. Back in 2006 it circle6
esponsibility to:
protect themselves against the risk of being them and always ask to see original
launched an Information From
Lenders scheme. This encourages circle6
used for mortgage fraud;
circle6
documentation.
Cross-reference and question documentation
lenders to tell the FSA about cases circle6
be able to recognise mortgage fraud; and
have in place robust procedures for verifying you receive whilst processing the application.
where they have detected information about clients and employees. For example, does the information on the
proven, or suspected, This means you also need to check the bank statement contradict that on the factfind?
fraudulent mortgage information you receive from those introducing Do the source and amount of income agree
applications they consider business to your firm so you know who you are with what the applicant has declared? Are
serious enough to have doing business with and understand where this benefits recorded on the bank statement (for
removed the intermediary business has come from.
from their panel. All mortgage intermediaries need to meet the circle6
example Jobseeker’s Allowance) and if so why?
Where possible, find out why a lender declines
It has strengthened its intelligence capabilities general requirements of the Systems and an application rather than simply trying to
and is now working with more than a dozen Controls section of the FSA Handbook (SYSC place it elsewhere without knowing the facts.
regional police forces and national law- 3.2.6R). This includes having systems and Declined applications can be due to the lender
enforcement agencies on live cases. It has also controls in place to counter the risk of
been successful in banning intermediaries being used to further financial crime. circle6
receiving fraudulent information
Use the management information in your new
implicated in mortgage fraud. Recurring themes The following FSA list highlights some of what business register and watch out for links or
in the cases so far include instances where the your firm should look out for and action for you trends identified between clients. These can be
b
circle6
roker was: t
circle6
Knowingly and dishonestly involved. circle6
o consider: purchases on the same development, identical
Suspected fraudulent documentation being loan amounts and the same employers,
Entering false information on mortgage used to support a mortgage application such as addresses and accountants. These could point
application forms and submitting mortgage bank statements, wage slips, P60s, accountant to fraudulent activity as gangs often target
applications based on information they knew references, passports, driving licences and
circle6
to be false. utility bills. Fraudsters commonly use fake circle6
brokers and lenders with multiple applications.
Ask yourself whether your firm is being
Submitting applications in their own name
circle6
with false income details. circle6
documentation to fool brokers and lenders. vigilant enough and has the appropriate
Is the income level declared by the applicant systems in place to prevent it being used to
Failing to take steps to prevent the firm being believable compared with their employment? perpetrate fraud.
circle6
used for financial crime.
Failing to meet minimum regulatory
Jan to Jun 2008 Jan to Jun 2009 % Change
circle6
standards of honesty and integrity.
Failing to cooperate with the FSA.
Fraud cases identified 104,548 119,829 14.62%
Financial Benefit/Losses avoided £431,967,984 £481,366,882 11.44%
Trends
But consumer fraud in general has increased as
Fraud Type Jan to Jun 2008 Jan to Jun 2009 % Change
well, according to CIFAS - The UK's Fraud
Identity Fraud - Granted 14,787 25,692 73.75%
Prevention Service - which says analysis of fraud
Identity Fraud - Not Granted 20,356 23,448 15.19%
trends during the first half of 2009 reveals a
Identity Fraud - Total 35,143 49,140 39.83%
continuing surge in fraudulent activity. The Application Fraud - Granted 8,950 5,930 -33.74%
260 organisations that are members of CIFAS Application Fraud - Not Granted 33,019 25,492 -22.80%
rep
circle6
ort: Application Fraud - Total 41,969 31,422 -25.13%
a 43% jump in the number of victims
False Insurance Claim 205 331 61.46%
circle6
of impersonation,
Facility Takeover Fraud 7,961 11,179 40.42%
a 74% increase in identity fraud
compared with the same period in
Asset Conversion 258 208 -19.38%
circle6
2008,
Misuse of Facility 19,012 27,549 44.90%
and a continued rise in facility Victims of Impersonation 36,501 52,243 43.13%
takeover frauds.
In the first half of 2009 over 52,000 Notes:
victims of impersonation were recorded Fraud Cases Identified refers to each proven instance of fraud identified by CIFAS Members
by CIFAS members. This represents a and filed to the CIFAS database. Financial Benefits. This is the amount of money that
truly alarming 43% surge from the first Members of CIFAS reported that they have saved through being alerted to previous frauds by
half of 2008. A 74% increase in the level of CIFAS warnings. Identity Fraud cases include cases of false identity and identity theft.
identity fraud (which includes both Application Fraud/False Insurance Claim relates to applications or claims with material
victims of impersonation and the creation falsehood (lies) or false supporting documentation where the name has not been identified as
of a fictitious identity by the fraudster) false. Facility Takeover Fraud occurs where a person (the 'facility hijacker') unlawfully obtains
indicates that, while this period of recession access to details of the 'victim of takeover', namely an existing account holder or policy holder
has revealed new methods of fraud, fraudsters (or of an account or policy of a genuine customer or policy holder) and fraudulently operates
return to 'old favourites' with a vengeance. It is the account or policy for his own (or someone else's) benefit. Asset Conversion relates to the
worth noting that forged or altered UK passports sale of assets subject to a credit agreement where the lender retained ownership of the asset
are the most commonly used document in (for example a car or a lorry). Misuse of Facility is where an account, policy or other facility is
support of fraudulent applications. used fraudulently.
What can you do? Source: CIFAS
www.mortgageintroducer.com September 2009 Mortgage Introducer
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44