CFI: Opinion
Fraud is an industry wide problem but we have to be more careful
by Guy Garrard, head of business development, Tiuta
mortgage fraud is reported to have nearly quadrupled in val- ue during the first six months of 2010 according to KPmg’s Fraud Barometer. mortgage fraud accounted
for over half of all fraud com- mitted. one of the biggest cases was worth £50 million, involving two solicitors who were charged with commer- cial mortgage fraud in relation to obtaining a money transfer by deception and dishonesty, while an estate agent was jailed
for six years after attempting to pull off a £2 million mortgage fraud after stealing the identi- ties of two homeowners. this analysis comes swiftly
on the back of recent rev- elations from Bdo Stoy Hay- ward which suggests mortgage fraud accounts for a fifth of all reported fraud and that third party customers and suppliers are responsible for 17% of all reported fraud on businesses, whilst internally, management cooking of the books has also caused 16% of reported fraud. Since its inception, the FSa
has banned 92 mortgage bro- kers for mortgage fraud and issued around £1.5m in fines, with a third of this occurring in the last year alone. in recent
Lowry Capital
news three people, includ- ing a former police financial investigator were sentenced to almost ten years imprison- ment in total for defrauding mortgage providers of £4.6m. Fraud is nothing new but
these figures certainly don’t portray the industry in the best of lights especially at a time when we are all working hard to rebuild the reputa- tion of the market. this is an industry-wide problem but for those providers operating in the short term finance sec- tor we have to be especially careful. it’s vital that provid- ers have robust procedures in place and go to great lengths to ensure that all aspects of the loan are strictly verified and
adhered to. it’s not just provid- ers that this applies to as the onus should also be placed on the introducing brokers and the solicitors acting for these applicants. the mmr itself is in part
a response from the FSa to close the loopholes in the mortgage lending process to help prevent fraud and this is certainly one element of the review that constitutes the regulator pursuing the right course of action. However, as with most things contained within the review the FSa has to be prudent in how this is implemented and ensure that it doesn’t make things too onerous and costly for inter- mediaries.
TM Bridging Finance
mortgage introducer SEPTEMBER 2010 45
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