FSA launches mortgage fraud crackdown

The Financial Services Authority (FSA) has outlined a number of measures it is set to introduce with the aim of tackling UK mortgage fraud.

The approach - which the industry watchdog hopes will make it harder for criminals to get away with committing mortgage fraud – involves 200 targeted visits to mortgage intermediaries from to assess their financial crime systems and controls.

In addition, the FSA is increasing intelligence received from lenders by streamlining reporting processes and providing more clarity on the information needed.

While no specific threat from individuals or organisations is the focus of the FSA campaign, it will seek to build new relationships with industry and establish a protocol for best practice procedures to reduce the potential for crime.

"Mortgage fraud is a serious and widespread problem. We have set out our approach and expect the industry to do its part in tackling this menace," said Philip Robinson, director of financial crime and intelligence at the FSA.

"Brokers should make sure that they provide suitable advice and that their businesses cannot be used for the purposes of committing fraud.

"Lenders must also have in place systems and controls to identify and reduce fraud, and continue to provide us with the intelligence which is key to success in this area."

Over the last 12 months the FSA has banned 17 individuals and levied fines, including a £129,000 fine against a broker, for mortgage fraud in the last 12 months.

However, more still needs to be done, finds the FSA.

The FSA will now encourage improved information sharing and intelligence analysis in the industry as well as reviewing the role of the Approved Persons regime, as it relates to mortgage intermediaries including brokers.

The Council of Mortgage Lenders (CML) has welcomed the FSA announcement.

"The FSA rightly identifies that the best way to tackle mortgage fraud is for lenders and the regulator to work together, along with law enforcement agencies, to root out fraudsters," said CML director general, Michael Coogan.

"People may not think of lenders as victims of crime, but unless fraudsters are tackled then honest customers are the ones who end up paying more.

"We welcome the FSA’s focus and practical approach in this area, and we expect that even more lenders will now participate in the voluntary initiative designed to identify and investigate broker fraud."

Chris O'Toole