Lenders should not be complacent about selfcertification mortgages, warned FSA chief executive John Tiner at the Building Societies Association's annual conference in Manchester last week.
Tiner said while the FSA's investigation into self-cert mortgages – which was prompted by allegations of abuse made by the BBC – concluded that lenders' systems and controls were broadly adequate to counter the risk of financial crime, there was no room for complacency.
He told delegates they should have systems in place to detect and report attempted fraud. They must check the information provided by borrowers is plausible and internally consistent and lenders must not accept such information at face value.
Tiner said lenders needed to test samples of information to ensure any assumptions made about accuracy were valid.
“You as lenders have a right to expect your customers to be truthful and borrowers need to be aware that fraudulent misrepresentation – whether encouraged by an adviser or not – is a crime,” explained Tiner.
“We expect all regulated firms to have systems in place to detect and report attempted frauds to the relevant criminal authorities.
“I wonder if the principles of good lending sometimes tend to get forgotten in the excitement of pursuing new sources of business and reducing administration costs.”