Information from lenders FAQs

Providing information to the FSA

How should we provide information to the FSA?

Please email it to us at: IFL inbox. You may wish to use the this form.

Is it alright to encrypt the data we send to you?

Yes, but as encrypted files are sometimes rejected by our email system, please tell us in advance if you intend to regularly send encrypted data. Please do this by emailing Charles Woods and contact Charles if you have any questions.

What do you do with the information after it’s submitted?

We will review the information and either take it forward as a case or hold it on file pending further information.

We investigate each case raised, by setting the information provided alongside any other data we may have – as well as material which other agencies may hold.

We will often investigate a case by visiting the firm in question.

Depending on the outcome of this visit, we may require the firm to undertake remedial action. In the most serious cases, the case will be passed to our enforcement team, who can begin action that can result in a fine or a ban of the individual or firm.

Who in the FSA gets to see IFL submissions?

Access to IFL submissions is limited to staff who are actively dealing with the cases raised.

Your supervisors and relationship managers will not see your IFL submissions.

How long does it take to deal with a submission?

This will depend on the information provided and the circumstances of the case. Because of the duty of care we owe to firms, we have to investigate cases fully – and this can take time, especially if we have to visit firms.

In the most serious cases firms can be dealt with quickly with the FSA able to suspend a firm within 24 hours. The full enforcement process can take up to 15 months. How rapidly a firm is dealt with depends on many factors, including the urgency and complexity of the case, the potential for customer detriment, and how co-operative the firm is.

We’re only a small lender, so we are unlikely to make many submissions. Is that going to make us look bad?

No, we simply ask that you submit whenever you have a suitable case for us to look at. We understand that different size businesses and different business models will mean that some firms send us more than others.

Confidentiality and data protection

Do you tell intermediaries that you are acting on the information you receive? Do you tell them who it is from?

No, the Financial Services and Markets Act 2000 (FSMA) requires us to keep this information confidential.

However, this cannot be an absolute protection. For example, if the subject of a regulatory decision appeals against it to the Financial Services and Markets Tribunal, then the Tribunal can demand that we release our information. We occasionally share information with other authorities as appropriate, when permitted by our legislation – this usually imposes a similar duty of confidentiality to the one we have under the FSMA. Similarly, if the result is a criminal prosecution, then disclosure can be required for the purposes of the criminal proceedings.

However, in general terms, we take every precaution to ensure confidentiality. Firms being investigated or visited are not routinely told why they are being examined. Similarly, we take precautions to ensure they cannot identify how they have come to our attention – or who might have pointed them out to us.

You should also note that the information you supply is the starting point for our investigations, not the end. We use it to find our own evidence, and as a rule the evidence used to support any enforcement action will have come from our own work. The likelihood of IFL material having to be disclosed even at Tribunal is therefore remote.

There may be occasions where it would help our work to be able to identify you in interviews with an intermediary under investigation (for example if the firm has destroyed or hidden relevant records). In the past, some IFL participants have been happy to allow this; others have preferred not to. We will always ask you in advance and the decision to identify you remains yours, not ours.

What is the status of the information under the Data Protection Act?

The Data Protection Act 1998 makes clear there are a number of exemptions, which allow organisations to share the information they hold about data subjects beyond what the data protection principles allow. The key exemption appears in section 29 of the Act. Our view is that s29(3) of that Act permits the disclosure of personal data for the purpose of the prevention or detection of crime, or the apprehension or prosecution of offenders. We consider that this should apply to IFL submissions as long as the information you share with the FSA is genuinely shared because in each case you have either proof or a suspicion of fraud. The exemption also applies to subject access requests you may receive, meaning that you are not required to disclose that an IFL submission has been made. Lenders should, however, confirm this view with their own legal advisers.

Can anyone gain access to details of IFL submissions through a Freedom of Information request?

No. To the extent that IFL submissions are confidential by virtue of FSMA, they will attract an absolute exemption from disclosure under the Freedom of Information Act 2000. We would not release the information, and we may choose not even to confirm or deny that we have received it. You should note, however, that if the requester appeals to the Information Commissioner, we are likely to have to provide the information to the Commissioner to permit him to carry out his investigation. However, the Commissioner is under a duty to keep such information in confidence during his investigation.

Getting the best out of IFL

What kind of submission should we make to get the best results?

The general rule is that the more information we receive, the easier it is to conduct a successful investigation.

Is there a “threshold” for deciding whether to report an intermediary?

We have not set a threshold. However, we list below a list of indicators of fraud we published with the Council of Mortgage Lenders in 2006. This list is not exhaustive, and lenders will be better equipped than we are to make a risk-based judgement about what is likely to be suspicious in their business sector.

Proven Fraud

fraudulent documentation, for example bank statements, utility bills, wage slips, passports, driving licenses etc;
false employment or income details; or
inconsistent information relating to the same applicant, i.e. various applications made with different incomes/details either to the same lender or lenders within a group.

Suspected Fraud

doubts over income and employment details;
links with other applicants where fraud is suspected, for example shared addresses, purchases on same development, identical loan amounts etc;
links between different mortgage applicants, for example shared bank accounts, and addresses;
applications cancelled when further information/verification is requested; or
Suspected fraudulent documentation.

How much information do you need? What should we include?

An IFL submission should ideally include: details of the broker; a description of why the submission is being made; known links to other brokers; copies of any correspondence undertaken with the broker about the issue; details of suspected applications, including the applicant name and date of birth; names of solicitors, accountants and valuers used; and the address of the security property.

We have had situations where we are aware – through National Hunter or Sira checks, for instance – that individuals or firms we intend to report through IFL have done potentially fraudulent business with other lenders. How should we strike the balance between letting you have all the information you need, and looking after the interests of our fellow lenders

One procedure which has worked for some current IFL participants is to inform us, as part of your IFL submission, that other lenders may be affected – and then to approach those lenders directly, suggesting that they too should make a submission. You can also give them the case reference number we have supplied you with to ensure that we can make the connections between the submissions.

Feedback and publicity

Will you be supplying feedback based on specific cases or on specific submissions?

In general, no. There may be circumstances in which the Financial Services and Markets Act 2000 prevents us from providing you with certain information.

However, we are determined to seek all practical ways to inform lenders about their specific contribution to the outcome we all desire: taking action against and removing unsuitable firms and individuals from the market.

What kind of general information can you provide?

We will aim to provide an overview of the progress of the scheme as a whole. It will not be firm-specific – either in terms of lenders or intermediaries. We are considering how best we can share it – whether through closed user groups, regular meetings, emails, newsletters or otherwise. We invite firms to let us know their views.

Other legal issues

A key concern among lenders is their legal liability should information supplied under IFL and acted upon by the FSA prove to be incorrect?

It is our view that as long as a submission is made in good faith – in other words, based on a reasonable suspicion of fraudulent behaviour – then it should attract qualified privilege, which supplies a defence to any claim for defamation. An intermediary would need to prove that the disclosure was actuated by malice to succeed in any action against the lender.However, lenders should confirm this view with their own legal advisers.

If we submit a suspicious activity report (SAR) to the Serious and Organised Crime Agency (Soca) about fraud emanating from a particular broker, and seek consent to keep taking mortgage payments, are we “tipping off” by also reporting it to the FSA?

No. There is no conflict between a lender’s responsibility to Soca to make a suspicious activity report – and to seek consent where necessary – and a report under the information from lenders project. The latter does not constitute “tipping off”, the offence described in section 333 of the 2002 Proceeds of Crime Act, since a person making an IFL report would have no reason to believe it would prejudice any subsequent SAR-related investigation. o It should also be noted that a SAR is designed to enable money laundering investigations, rather than to inform the regulator about the possibility of fraud. As such, please continue to make IFL reports as well as submitting SARs.

Information From Lenders Project: FAQs

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