This is a question we could all benefit from having clarified, especially as it is starting to be part of our every day existence in the mortgage world.
We as a network have set about tackling the question head on, what is surprising is how such a simple question can evoke so many different answers.
We all know that high profile fraud is to do with stopping money laundering, but what about the day to day fraud that creeps up on advisers, it is this area that lenders are beginning to take a very active role in eradicating.
Pink’s focus has been to run workshops to help educate our advisers on how to spot this fraud.
Mortgage fraud is deception, which forms many guises, we come across it most when clients set out to hide the facts, are you skilled enough to notice?
A payslip showing over inflated income, along with hidden CCJs are becoming more common. Any adviser who submits such a case to a lender at best would be classed as being naive and irresponsible, at worst complicit.
The actions open to lenders range from warning letters to removal from the lender’s panel, which is one step away from losing your livelihood. Now this may seem harsh but it is reality.
Take this example: you have a client who tells you they are employed, presents you with three pay slips, but then forgets to tell you that they also own the company that they are working for.
Fraud or no fraud?
You are the fact finder, no excuses, you are expected to know these things, not guess. Whatever you fill out on an application form is taken as read that you have checked all the facts first.
There has been a significant change in what is expected of mortgage advisers since the beginning of the year – mortgage advisers are now part of the underwriting process.
It is no longer enough just to follow lender guidelines and put a tick in a box, you need to go much further to prove that you really know your client.
This means asking open questions, writing case notes and doing your own investigations; you need to use credit scoring information and actually find out if your client is telling the truth by carrying out basic checks. Such as does the client own more than 25% of the shares in the company they work for?
If so, company accounts rather than payslips are required. You have to protect the lender against a client using the lender to raise funds to prop up an ailing business.
In saying all this, an adviser cannot be expected to find every falsehood and I would like to believe a lender, with a network’s support, can differentiate between complacency and diligence.
To me the best way of demonstrating that you did everything in your power to find out all you could about the client, through your notes and by writing up every piece of information obtained from a client. Your protection is the quality of the notes you have on each file.
This is a significant cultural change for some advisers but it might just be the difference between stopping that letter dropping through the post.
One final point to consider is introduced business; there is a danger that struck off advisers will attempt to sell their databases to unsuspecting advisers, or attempt to become a go between.
Turning a blind eye is not an option you are expected to have carried out diligent checks on introducers at the same standard as you do for clients.
It feels like fraud is on the increase but that may well be down to the fact we are all much better at spotting it.
As a result, it’s in everyone’s best interests, lenders, networks and advisers alike to work together to reduce our exposure to fraud.
