The FSA says it is concerned lenders are not properly vetting mortgage brokers before accepting them onto their broker panel.
In a thematic review, published today, looking at mortgage fraud committed against lenders, the FSA said lenders should improve the way they manage their relationships with brokers.
The paper says: “In the past few years, there have been substantial improvements in lenders’ oversight of some relationships, particularly those with solicitors.
“However, there is scope for significant improvement in how lenders manage relationships with brokers.”
The FSA claims some lenders simply check the FSA register to vet mortgage brokers before entering into partnership with them.
The paper adds: “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.
“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.”