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FSA will compile hit-list of brokers in fraud probe

The FSA is to fight fraud by investigating mortgage brokers associated with high levels of arrears, benefit claims and complaints.

In a move echoing the approach of the recently launched Insurance Fraud Bureau in the general insurance market, the FSA intends to pounce on brokers from a hit-list compiled using data that highlights potentially fraudulent activity.

It will also target applicants linked to suspected fraudulent activity and applications which are cancelled when further information is requested.

The FSA has identified common examples of fraudulent activity since asking lenders to report suspected fraud among brokers earlier this year. Common cases include the use of false documentation, the presentation of false employment or income details and inconsistent information given by applicants.

A council of Mortgage Lenders spokesman says: “Fraudulent mortgage applications represent only a tiny fraction of those submitted to lenders.

“One area that this has been focused on this year is mortgage fraud where intermediaries are suspected of involvement. The measures will give lenders and the FSA a better sense of the extent of fraud and we fully support it. Many commentators agree there is now scope for a national fraud strategy.”

Brentchase Financial Services mortgage specialist Mike Fitzgerald says: “It is not just an intermediary issue. Fraud tends to happen in a chain that includes solicitors and valuers.”


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