The FSA has today set out its approach for tackling mortgage fraud, which it says will make it harder for criminals to escape punishment.
The FSA’s approach to the problem will include targeted visits to 200 mortgage intermediaries to assess their financial crime systems and controls.
The role of the Approved Persons regime in relation to mortgage brokers will also be reviewed.
Lenders will be encouraged to provide more intelligence and the FSA will streamline the processes for reporting possible fraud cases. The regulator hopes this will enhance its supervision of firms.
Relationships between the FSA and other regulators and law enforcement partners will be strengthened.
Philip Robinson, director of financial crime and intelligence at the FSA, says: “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.”
In an open letter to the CML today, Robinson said it was encouraging to see lenders prioritising mortgage fraud despite other major problems in the market.
The CML is working with the FSA to encourage lenders to report suspected fraud cases, but the initiative has not been as successful as they had hoped.
In his open letter, Robinson says: “Firstly, the IFL [information from lenders] project was conceived as a voluntary joint initiative between the FSA and the CML, but takeup has not been as swift as either we or the CML would have liked.
“Working together, we have now identified and answered the concerns which lenders say have kept them from fully participating. I therefore anticipate that the remainder of the CML’s membership should now be ready to sign up.”
Michael Coogan, director general of the CML, says he is hopeful further progress will be made to tackle fraud in the industry.
“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,” he says.
“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.”
The FSA has banned 17 mortgage brokers over the past year, with enforcement action accelerating in recent months.
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From 6 April 2019