Solicitors, brokers and surveyors were all flagged as a risk in the battle against fraud by lenders, reported in the FSA’s thematic review of lender’s systems and controls to detect and prevent mortgage fraud, out yesterday.
Robert Sinclair, director of AMI, said: “We continue to support the drive to reduce the level of fraudulent activity in the mortgage market. However, for mortgage fraud to be prevented all parties must be diligent, including lenders and solicitors,” he said.
“Lenders need to consider how their own direct sales staff can also be involved in fraudulent transactions,” he added.
Sinclair said lenders should always be “diligent when reviewing their broker panels but any action taken should be appropriate and proportionate.”
A mortgage adviser register is an idea AMI has always supported and Sinclair said it would be useful for the industry to be able to identify rogue operators and stop them moving between firms.
“We are therefore disappointed that FSA has delayed the introduction of individual registration for mortgage sellers until at least 2013,” he said.
In the review out yesterday, the FSA said despite improvements in lenders’ oversight of relationships with solicitors, there is scope for “significant improvement” in how lenders manage relationships with brokers.
The regulator also said it was concerned that some lenders relied solely on a mortgage broker’s entry in the FSA Register to vet them.
“Checking the FSA Register can be the first step of a due diligence process but it cannot be regarded as sufficient to provide complete assurance,” it said.
“Recent FSA enforcement action has shown very clearly that even FSA approved brokers do not always act with integrity or take steps to mitigate mortgage fraud risk.
“Lenders must take steps to satisfy themselves of a broker’s suitability on an ongoing basis,” said the regulator.
FSA investigations into misconduct by mortgage brokers have led the regulator to ban more than 120 individuals from working in the industry – and to impose more than £2m in fines – since the beginning of 2009.
