News Review


Brokers wake up to mortgage fraud threat By Sarah Davidson


mortgage fraud has been at the forefront of the industry’s minds with the Financial Services authority using it as its justification for banning self-cert and fast-track mortgages. Further evidence from accountancy firm Bdo LLP revealed that mortgage fraud accounts for a fifth of all reported fraud and 36% of fraud in the finance sector. the Bdo research said for


the first six months of this year fraud losses rocketed to £1.06 billion and eclipsed previous half year figures at almost the same level as for the whole of 2008. the average value of a single fraud has also increased to almost £6 million, an increase from £5m last year. industry stalwart John malone, chairman of PmS,


has been touring the country giving brokers, lenders and even the FSa tips on how to identify and deal with fraud in the mortgage industry, highlighting solicitor, valuer fraud and income inflation as particular problem areas. He said: “all aspects of


fraud are costing this country around £30 billion a year and mortgage fraud is anywhere between £2 billion and £5 billion. it’s a major issue, that money is fuelling and funding terrorism, drug running, prostitution – all things which are damaging our economy. the point of these talks i’m doing is to establish an awareness programme with intermediaries, many of whom don’t think fraud applies to them but it’s all around them. “the other thing i’m trying


to do is get intermediaries represented on the national Fraud Forum, established at the end of last year, because we’re currently the only profession that isn’t. that tells me that intermediaries will get blamed when things go wrong, because we don’t have a voice. i’m trying to convince ami and the cmL that intermediaries should be round the table. this is a serious issue.” in further evidence that


the intermediary sector was taking action against fraud, brokers were warned by network Sesame that they could be committing money laundering offences without even knowing it. in a financial crime seminar held in July, Sesame ars were told that selling a self-employed person a protection policy if


there was any doubt that that person’s real income was not the same as their declared income would be classed as money laundering. david redgrave, head


of business standards at Sesame, said: “if an adviser knows, or suspects, that his client has evaded tax (ie because he has said his income is greater than that declared to Hmrc), then the adviser is obliged to make a suspicion report to his mLro. “if the adviser does not


report his suspicions, and arranges a policy for the client, then the adviser may also be committing the “arranging” offence under the money laundering regulations (as well as the failure to report the offence).”


NACFB conference offers top commission tips By Sarah Davidson


the national association of commercial Finance Bro- kers held its first annual expo at Birmingham’s nec on 30th June covering top- ics as diverse as fraud fight- ing, invoice finance and how brokers could increase their commissions. more than 600 commer-


cial finance brokers, lenders, funders and asset finance pro- viders showed up to support the conference and adam ty- ler, chairman of the nacFB, said the trade body was de- lighted with the turnout. issues covered by the con- ference’s 12 speakers included a call from Kate Sharp, head


of trade body the asset Based Funders association, to com- mercial brokers to recom- mend invoice finance to their corporate clients as a viable cash flow strategy in the long term. She said the “myths” surrounding invoice finance were hindering the growth of a potentially enormous mar- ket, which could earn brokers thousands in extra revenue. “the market in 2009 saw


a £191 billion turnover and 43,590 clients serviced,” said Sharp. “that’s good, but it’s nowhere near good enough. Brokers are missing out on commissions they can earn when they refer their clients to a factor.” Brokers were also given


4 mortgage introducer AUGUST 2010


advice on selling business protection as clare Harrop, head of specialist protection at Legal & general, revealed that the protection gap in the business protection market is £1.1trillion. She said brokers are still not taking advantage of potential commissions they could earn by selling this product to clients. She called on brokers to


help raise awareness among their corporate clients about the benefits of business pro- tection, and said that on an average premium of £120 per month, brokers could earn a commission of £1296. and trade body the Finance


and Leasing association launched a “tip-off” system to


encourage commercial bro- kers to share information on fraudulent activity in the asset finance industry. Julian rose, head of asset fi-


nance at the FLa, said the as- set finance industry and bro- kers in particular must show they are fighting fraud actively by alerting the FLa about any dodgy activity they come across. nacFB members are now able to post information on the system through the nacFB. He added: “often brokers


will spot a fraudulent appli- cation because they meet the customer and never send it through to a funder. We want to ensure that intelligence isn’t lost from the system.”


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