He’d forged payslips and P60s for his clients to secure mortgages for them.
Farrell’s case reminds us that mortgage fraud remains all too common, despite all the progress that has been made on due diligence, data protection and the investigation of suspicious cases since the last crisis.
Brokers want to see fraud end as much as anyone; they want to see the market booming again and the costs imposed by fraud are part of what’s holding it back. It was great to see them finally being recognised by the National Fraud Authority by having John Malone appointed to the Mortgage Fraud Forum to represent them.
In the face of all of this good work, why has the level of fraudulent activity remained so stubbornly high?
A lot of this is down to increasing sophistication and innovation among fraudsters. We’ve made it a lot harder to make money out of fraud, but they’ve responded by putting a lot more effort into their scams.
The other problem is that the mortgage business will always be one with more vulnerability to fraud than most. Each transaction involves many parties and many steps, and each link in the chain is a potential opening for the fraudsters.
What brokers need to do in the face of this is make vigilance over fraud absolutely central to their mindset and to their routine business practices. Following up on a suspicious detail is one thing, but not all fraudsters look suspicious – you have to investigate clients proactively.
As a result, you will uncover more fraudulent activity, guaranteed.
This level of vigilance is costly. Specialist IT can reduce that burden, with the right systems able to automate much of the oversight required to stop fraud. This frees up staff to spend more time running the business and helps to stop fraud prevention being the first thing to slip in busy periods.
Good brokers have been fighting hard against fraud for some time – they’re making progress and I commend them. But the problem is still stubbornly with us. We all need to dig deep, make it a top priority and push to drive fraud down further and faster.
Mark Blackwell is managing director of xit2
