FSA calls for action over mortgage fraud
September 19, 2008
The UK’s financial regulator, the Financial Services Authority, is called for increased action to combat the problem with mortgage fraud, which seems to have risen since the onset of the global credit crunch, which has resulted in tighter credit conditions and lack of availability when it comes to mortgages. The situation has apparently resulted in an increase in the number of mortgage brokers that are falsifying information on applications forms in order to get through mortgage.
The FSA has seen this problem rising over recent months, and has already fined and banned a number of mortgage brokers for engaging in this sort of fraudulent activity. Officials from the FSA now want something to be done about the situation before it spirals out of control. Lenders have been warned by the regulator that they need to improve their measures and defences when it comes to applications for mortgages so that they can more easily weed out ones that appear to be fraudulent.
Two hundred mortgage firms are already being looked into by the FSA to ensure that proper checks and controls are in place. Officials from the FSA have said that many lenders simply do not have the controls in place to protect themselves against financial fraud.
One FSA official said: “The FSA continues to take very seriously the question of whether lenders’ systems and controls for dealing with mortgage fraud are proportionate to the risk. We are likely to take particular note of cases where weaknesses in due diligence and customer checks - or in outsourced relationships with third parties - may have contributed to a heightened mortgage fraud risk.”
The Council of Mortgage Lenders stated: “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 expect that even more lenders will now participate in the voluntary initiative designed to identify and investigate broker fraud.”
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