• Broker
    The information contained in this area of our website is for FCA regulated brokers only and not intended for consumer usage.
  • Consumer

BEATING FINANCIAL CRIME

By Rob Jupp

Fraud continues to be the real burning issue of the moment. At the ASTL conference on the 1st October Jonathan Newman of Brightstone Law said that he believes that mortgage fraud now exceeds £1billion, although he said that no one really knows the true extent as, understandably, few lenders will reveal the actual extent of the fraud they have suffered.

More worrying was the fact that non-bank lending is seen as a ‘soft touch’ for fraudsters. This includes all bridging, specialist lending and other non-regulated activity.

It has long been my concern that the specialist lending market has been identified as an area that is vulnerable to fraud. It is therefore essential for everybody in the specialist lending sector to work together to stamp it out.

It is human nature to use the path of least resistance and so fraudsters will look for the weakest link in the chain of any financial transaction. This could be telephone staff, an introducer, a solicitor or anyone in the chain processing a loan or a mortgage. Typically a fraudster will test the water and start off with low level fraud, then, for professional fraudsters this can escalate if they feel they have a reasonable chance of successfully perpetrating their crime. Less sophisticated fraud is more likely to be people who were rejected on the high street but see a specialist loan as an easy option.

This is certainly something that we at Brightstar are not going to tolerate in our business; we are reliant on a good steady quantity of low risk business, as I know are many of the people we work with, so we need to ensure that our specialist lending community is not a safe haven for crime of any kind.

To show how serious we are about this we have recently appointed a financial crime and compliance specialist who has extensive experience gained from both the work with police enforcement and in working for a major bank.

We all need to be determined to ensure that the specialist market is not used for fraud. It is there to help people with a genuine need for a mortgage that they cannot get on the high street but which they can clearly afford. It should never be an easy option for a fraudster as right and proper checks for identity, affordability, money laundering and fraud should always be in place for every type of mortgage or loan.

Enhanced customer due diligence checks are as vital as ever to ensure that we really know our customers. It is time that we clearly got the message across that the specialist market has standards at least as high as the mainstream market.

It’s time we got together to ensure that somebody rejected from one lender or distributor as a potential fraudster cannot then easily move on to another part of the industry. In many cases this information is shared but we need to get more sophisticated in this to make sure it happens right across the industry. Lenders have the SIRA and CIFAS online systems for sharing information which are not available to brokers, so maybe it is time we put our own system in place. At Brightstar we are using new technology to assist in flagging with suspicious activity to combat fraud but it’s time we banded together to make this industry wide.