More detail on the initiatives
Our approach to tackling mortgage fraud includes:
1. Targeted supervisory visits.
We are planning a programme of mortgage fraud-focused visits to a representative sample of 200 mortgage intermediaries in the second half of 2008.
We have also written to key trade associations, the CML, IMLA, AMI, BBA and BSA, to remind their members that they should have determined their vulnerability to fraud risks and put in place appropriate mitigations. We also emphasise that we will not hesitate to take action should we identify serious short comings in systems and controls.
2. Increased intelligence from lenders.
The Information From Lenders (IFL) project was launched in 2006, as a result of collaboration between us and the Council of Mortgage Lenders, to allow lending institutions to report to us mortgage intermediaries they suspected of being involved with mortgage fraud. Since that time, lenders have submitted more than 300 reports, allowing us to take actions against dozens of intermediaries which range from enhanced supervisory oversight to prohibitions and heavy fines. In some cases, IFL information has also been passed to police and other regulators for further action.
So far, of some 150 mortgage lenders operating in the UK, about 35 have participated in IFL. Working with lenders and trade associations, we have identified and responded to the key reasons why others have felt unable to sign up. We now expect many more lenders to take part, and are upgrading our internal processes to cope with what we anticipate will be an increased workload as a result.
3. Enhancing how we use intelligence.
Our Financial Crime and Intelligence Division is developing a mortgage fraud database to include data from other FSA sources, IFL and from intelligence liaison, to facilitate the identification of patterns of mortgage fraud and enable us to better target our resources.
We have been increasingly successful at identifying and tackling fraud by mortgage brokers. Improved reporting by lenders and focussed supervisory and enforcement investigations are the main reasons for this recent surge in prohibitions and fines. In the last year we have banned 17 individuals, including a fine of £129,000 against one broker, relating to mortgage fraud.
4. Strengthening our engagement with partners.
We will continue to assist law enforcement agencies, including regional police forces, by providing them with specialist mortgage fraud expertise. In particular, we are pro-actively identifying possible mortgage frauds by collaborating and exchanging intelligence with the City of London Police, the national Lead Force for fraud Through this collaboration, we can tackle mortgage fraud throughout the UK at all levels; from individuals acting alone, to corrupt professionals abusing their position and organised criminal groups exploiting the mortgage market. We also work closely with other regulators that have an interest in mortgage fraud, by sharing information, experience and co-operating on cases where appropriate.
We also work closely with other regulators that have an interest in mortgage fraud, by sharing information, experience and co-operating on cases where appropriate. We have been working closely with our partners including the National Fraud Strategic Authority (NFSA) to develop a co-ordinated strategy to tackle mortgage fraud. The NFSA is being set up, following the Government’s Fraud Review, to develop and deliver a national counter-fraud strategy which will include co-ordinating the sharing of information and intelligence across all stakeholders involved in tackling fraud.
5. Market-led solutions.
For some time, we have been discussing with lenders, trade associations and anti-fraud bodies ways to improve information sharing and intelligence analysis within the industry. Informal contacts between lenders have demonstrated that when information is shared, patterns emerge which can point lenders – as well as regulators and law enforcement agencies – to organised mortgage fraudsters. The Council of Mortgage Lenders is now talking to several anti-fraud bodies to develop a cross-industry capacity to analyse application data, building on existing and widely-used systems. We have supported this initiative, and will continue to offer assistance as appropriate, as well as encouraging broader private-public sector dialogue and information sharing.
6. Approved Persons regime.
In 2002/03 we decided that mortgage brokers did not need to be part of the Approved Persons regime; however, we believe it is now appropriate to review that decision. The review will be conducted in Q4 of 2008, at which point we’ll consider the options available to provide us with the most appropriate regulatory solution.
