Don’t miss the obvious on fraud – Marketwatch

As part of Fraud Week on Mortgage Solutions, our Marketwatch column asks three industry figures whether the mortgage world could be doing more to battle fraudulent activity of any kind.

Our three commentators this week are:

e.surv’s Richard Sexton who thinks valuers have a bigger part to pay in fighting fraud and says there’s no place for ‘I’m alright Jack’

Mark Graves, director of Pink says some adviser are being unfairly penalised for honest mistakes and the real wrongdoers are not treated severely enough

Paul Shearman of IFA network Openwork highlights the danger of introducer arrangements and fraudsters targeting already vulnerable borrowers

Richard Sexton, director of business development, e.surv

Valuers are the eyes and ears of the lender and have a huge contribution to make in detecting and preventing fraud. This should also hold true for everyone involved in the process.

The valuer is unique in that often, they are the only person to physically meet the applicant and can use this time to sniff out elements of concern and discreetly advise the lender. Also as part of the day job, valuers check that the security is as described – something that automated tools simply can’t do.

This year alone our team have flagged fraudulent cases totalling millions of pounds to our clients. the industry can always do more and the truth about fraud is that once you’ve detected a model for its accomplishment, the chances are the fraudsters are already cooking up their next often very sophisticated scam.

Make no mistake, fraud is big business and will inevitably grow if we don’t invest in countermeasures today. I’d like to see more communication of concerns being shared amongst parties.

It’s with some regret that in the past I have seen one entity’s successful detection just results in the fraudster moving on and hitting someone else – rather than being brought to book. There should no place for ‘I’m alright jack’ in the war on fraud.

Mark Graves director of mortgage network Pink

The industry could do far more to combat fraud. Having a co-ordinated approach with a centralised system would be a good starting point, plus rehabilitation for brokers who have merely made a mistake but a complete ban from the industry of those complicit in fraud.

We all need to do more especially regarding education. At the moment there is no consistency from one lender to another. This results in some brokers who have been incompetent or made a genuine mistake receiving the same punishment as an adviser who has been complicit and is fully aware of what they are doing.

Unless we become co-ordinated, fraud will continue to find a way to work its way into the fabric of our businesses. More and more advisers will be trapped by mistakes and asked to leave our industry and fraud will become more sophisticated and bypass the gate keeper ie the adviser. A central register of everyone found to be involved in fraud including client’s names, solicitors and advisers will need to be kept to combat the future onslaught.

The industry is crying out for a central register. Until we solve this issue, struck off advisers will chance their arm by moving from networks to DA authorisation to sidestep the reference requirement, becoming unregulated or hide by specialising as an insurance adviser.

Paul Shearman, mortgage, protection and general insurance proposition director at Openwork

The National Fraud Office estimated mortgage fraud to be worth £1bn in 2012.

You could argue that the industry is too complacent when it comes to introducer arrangements – one of the biggest areas of mortgage fraud. In the majority of cases, if introductions are for mortgage purposes only, it’s not a regulatory requirement to set up an introducer agreement. However, we recommend all brokers put a formal agreement in place for any introducers they work with. A formal contract is often enough to ‘scare off’ any prospective fraudulent introducers.

Another growing area of mortgage fraud affects those who can least afford to be caught up in it – homeowners in arrears or facing repossession. They may be tempted by offers to buy their property for a discounted price for a quick sale, but these deals sometimes involve fraud. The FSA issued guidance to consumers and it’s important that advisers are also up to speed so they can help clients out who may find themselves in this situation.

Openwork’s own guide to avoiding mortgage fraud has been very well received by our advisers and many in the wider market. It covers the most common areas of fraud and how to defend yourself against them