Lack of guidance frustrates but broker says peers who assist fraudsters will still 'have their careers cut short'
Mortgage brokers are calling for the Financial Conduct Authority (FCA) to take a more active and practical role in combating mortgage fraud, as new and traditional schemes continue to challenge the sector.
Mortgage Introducer interviewed a couple of brokers, who stressed that while vigilance and due diligence remain crucial, the current regulatory framework lacks the clarity and support needed to address fraud effectively.
“From my perspective as a broker, I don’t see a great deal of direct support from the FCA in tackling mortgage fraud,” said Keith Humphreys (pictured top left), managing director at Pinpoint Commercial Finance.
“There isn’t a clear or easy reporting route for brokers. At the moment, it’s clunky and time-consuming, and in practice, it often feels simpler just to step away from a suspicious client rather than try to report it. But for smaller brokerage firms like ours, a bit more practical support and a clearer reporting process from the FCA would definitely help.”
Bob Singh (pictured top right), director at Chess Mortgages, echoed these concerns, warning that “the fraudsters are one step ahead.”
“With the advances in AI, fake documents can be ordered on the net. The FCA and lenders could do a lot more to combat and reduce the incidence of fraud. Sadly, brokers who participate in this type of work will have their careers cut short.”
Both brokers highlighted the need for more robust enforcement and feedback mechanisms. Singh suggested, “Lenders should dish out CIFAS markers where irregularity or foul play is suspected. A decline has no consequence to the borrower because they will simply try again. A CIFAS marker will be the just punishment. Brokers need to be given feedback so they can learn from their mistakes. Three strikes rule should be at play.”
“Fraud isn’t always complicated,” Humphreys pointed out. “Sometimes it’s as simple as giving the wrong information on an application, like overstating income or misrepresenting employment, or hiding credit commitments or historical adverse. The most common things I see are inflated income, credit problems being hidden, or other misrepresentations.
“In buy-to-let cases, fraud often takes the form of overstated rental income, exaggerated portfolio values, or hidden commitments that don’t appear on a credit file. These tactics are all designed to make an application look stronger than it really is.”
Singh pointed to “scheme abuse” as a growing concern. “First-time buyers can buy a property with a residential mortgage, will let it and not move in,” he said. “First-time buyers are able to purchase a buy-to-let property and move in themselves, therefore, getting an interest-only mortgage and lower payments. Brokers have to be ever vigilant that clients are not gaming the lender.”
The brokers described how the lack of clear FCA guidance and reporting channels leaves firms to rely on their own procedures. “We all know what our responsibilities are, and most firms have good systems in place, but the process of actually raising a suspected fraud case isn’t straightforward,” Humphreys said. “In most of these cases, the application just doesn’t progress. If I can’t get the right information, I can’t move forward. I make it clear to clients from the start that honesty and transparency are essential, and if that’s not there, then I disengage with the client.”
Singh noted that brokers are often the “front line of defence” for lenders, but without stronger regulatory backing, some may be tempted to overlook warning signs. “For small brokers who are not busy the temptation to turn a blind eye may be too great. Busier firms can be ruthless and the slightest whiff of anything a bit suspect means they simply refuse to engage with that client.”
Mortgage fraud, the brokers warned, has wide-reaching consequences. “Mortgage fraud has a knock-on effect that reaches right across the market. For lenders, it damages confidence, which leads to tighter criteria, slower processes, and higher costs for genuine borrowers. Lenders have to recover their losses somehow, and that means everyone pays the price in the long run,” Humphreys said.
Both brokers believe that until the FCA and lenders strengthen their approach, the sector will remain vulnerable. “Until lenders come down hard on fraudsters, it will continue to happen under the radar,” Singh said.
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