They are surrounded, with weak economic growth and the eurozone crisis on one side and political exhortation to increase lending on the other.
Gross mortgage lending has nosedived in July after a push to meet June lending targets, proving the prescience of the Bank of England’s Credit Conditions Survey that forecast lenders’ would pull back from the market this autumn.
Lenders are also coming under attack from a third angle – the deceit and subterfuge of third party fraud.
With economic growth slowing to a crawl and personal finances being squeezed by chronically high inflation, there will be greater temptation for the people employed by third parties to commit fraud to boost their shrinking incomes.
This will bring third party fraud and the need for lenders to supervise third parties into sharper focus.
Lenders should, for instance, be prepared to defend against conveyancer fraud themselves – rather than leaving in the hands of industry bodies that ultimately lack the power to impose sanctions or enforce quality schemes.
To do this, lenders need to bring the selection of conveyancer firms and the quality management of the conveyancing process under their direct control.
Lenders have to rely on conveyancers to safeguard their interests.
However, the harsh reality is fraudsters often use a solicitor at the core of the fraud to direct and reassure other professionals acting superfluously.
An early stage in the management of this activity is for lenders to validate not only which firm is on their legal panel, but also who is acting on their and their borrower’s behalf.
Lenders should be able to investigate their conveyancers’ activity by instruction, comparing all new instructions against previous instructions and crosschecking it against a range of fields to confirm whether there are any matches or patterns of suspicious activity.
The best audit and fraud tools help lenders track solicitors’ work to ensure their internal controls aren’t compromised.
The management of the conveyancing process needs to be transparent, helping a lender manage and monitor conveyancing work carried out on its behalf.
Lenders need to be able to review particular cases in real time while they are being processed.
With lenders engulfed by economic factors largely out of their control, it’s more important than ever that they take the bull by the horns.
However lenders decide to tackle solicitor fraud, they need to be in firm control of the conveyancing process.
Mark Blackwell is managing director of xit2
