Spotting introducer fraud, scheme abuse and ID theft

Some fraudsters, for example, are preparing three months in advance by crediting their bank account with amounts they then portray as salary with false payslips. There are a number of checks that a broker can make to confirm the validity of income. These include checking the payslips for obvious errors such as incorrect tax codes or year-to-date figures. Checks to see that the employer does actually exist, and also even phone calls to the employer to check the client works there.

Introducer fraud

It was one such phone call we made to a large employer, named on the payslips, which uncovered that the client did not work there. The case had been introduced to us and it became clear that the introducer was party to the fraud. These checks stopped us from presenting a fraudulent case to the lender and hence protected our reputation.

Lenders are recognising that a large percentage of fraud is from introduced cases and the broker is rarely complicit in this. Some lenders are moving towards creating a central register of known fraudulent introducers, and making this available to broker partners which I think is an excellent idea.

If you do work with introducers, it is very important to have direct personal contact with the client and take any documents directly from the client rather than through the introducer.

Scheme abuse

Scheme abuse is increasing and often driven by clients desperate to move to a larger property, but cannot demonstrate personal affordability. I have lost count of the new client calls we have received where the client has actually stated that they would like a buy-to-let mortgage on their new residential property as they do not qualify for a residential loan. Needless to say when we explain the implications of living in a property that has a buy-to-let mortgage on it, we usually do not hear from them again.

Simple sense questions can draw out the client’s true intentions for a buy-to-let mortgage. Are they a first-time landlord, for example, or is the buy-to-let property larger or higher value than their current main residence? Is it nearer to the client’s work address and is the value of the new buy to let in keeping with the rest of the portfolio?

Where we have been unable to get completely comfortable, a simple call to the estate agent to ask if the clients are purchasing the property to let out or live in can often be very revealing.

Verification tools

Whilst it is true that lenders do have access to additional fraud prevention tools that brokers do not, such as SIRA and Hunters, there are some cost effective systems that brokers can access. These include www.192.com, where brokers can search voters roll records to independently verify address history and connected parties to establish if a family member is living in the buy-to-let property and also look at historic sale prices.

Another good site is www.sanctionsearch.com. Not only can brokers meet their regulatory obligation for checking clients against the sanctions and PEP lists, they can verify identity using a passport or driving licence, verify a date of birth, public credit status records such as CCJs, bank details, national insurance numbers, telephone numbers and much more.

The costs of the systems range from just a few pence or a few pounds for each search type, which is negligible compared to the risks of not completing checks.

It would be great to hear from brokers about the systems they are using and the benefits so we can all share in maintaining robust businesses.