Independent review and analysis

Fraud on a lenders mortgage book

The recent findings from the Financial Services Authority’s mortgage fraud review indicated that although some lenders have adequate checks and controls in place, Tracey McDermott, acting director of enforcement and financial crime at the FSA, was concerned that not all lenders were embracing the findings of their review.

A key aspect that was highlighted, was that lenders were not reviewing their historic mortgage books and the FSA insisted that lenders, both large and small, conducted due diligence on their entire existing mortgage book.

It was also noted that only a few lenders were dedicating enough time and effort in training staff in fraud prevention and suggested that some underwriters did not have the necessary skills and experience required to detect fraudulent applications.

In addition the report commented that there was a distinct lack of formal procedures within lenders to report fraud or the processes were unclear and left staff confused as to when and how to report fraud.

In January of this year the National Fraud Authority published its annual fraud indicator which estimated the cost of mortgage fraud in the UK to be £1 billion.

If these figures are to be believed, there can surely be no excuse from any lender; they simply must put procedures in place to review their existing mortgage book to comply with their fiduciary duties.

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