The recently published Fraudscape report from Cifas – a not-for- profit organisation dedicated to preventing fraud – provides an insight into this issue based on the frauds recorded by more than 260 Cifas members in 2010.
The report contains a lot of interesting analysis but a question posed in the executive summary struck a chord. It asks: “What did we do to reduce fraud levels but more importantly what more do we do to battle whatever comes next?” We have learnt a lot by looking back but now we must look forward to try to be one step ahead of the fraudsters.
Mortgage lenders and product providers have improved systems and trained staff to be more aware of fraudulent activity. By sharing our experience with the police and trade bodies, levels of mortgage fraud reduced last year. The authorities can take some credit for making the public more aware of the dangers of identity fraud by highlighting action to secure their personal data.
However, a continuing cause for concern is the availability of fraudulent documentation such as pay slips and P60s. This is an issue that has been highlighted again recently in the trade media.
Measures could be introduced by lenders to formalise the verification of a person’s identity. This could mean only face-to-face meetings and mortgage submissions would be acceptable to the lenders. This significant change in the way mortgage business is submitted by a number of firms would be a big concern to their operations but could also have implications for the wider mortgage intermediary sector.
Maybe it is time to ask if it is in our profession’s long-term interests to accept every client at face value.
Mortgage intermediaries have an opportunity to take the initiative and raise the bar on standards. It is imperative we carry out thorough client due diligence and ensure all documentation is better verified, especially where an intermediary is engaging with the client at a distance.
In answer to the question posed above, the alternative is to wait for other parties to take the initiative, which could have more serious implications for the sector.
John Malone is executive chairman of PMS