Action over mortgage fraud needed states FSA

The UK’s financial regulator, the Financial Services Authority, has stated that more action needs to be taken to combat the rising problem of mortgage related fraud. The FSA has already banned or fined a number of mortgage brokers over recent months after discovering that they were engaged in fraudulent activity, such as lying about applicants’ income and wages in order to increase the chances of getting a loan.

Officials from the FSA have warned lenders that tighter security measures and greater controls are needed to try and defend themselves against the rising influx of fraudulent applications, and the agency is also targeting two hundred mortgage firms to check that proper controls and procedures are in place.

An 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 welcomed the move, stating: “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.”