Stay ahead of the fraudsters

Bob Hunt

21 December 2020

Another increase in criminal activity may follow the second lockdown

The recent FCA letter to mortgage intermediaries as part of its Portfolio Strategy was interesting for a number of reasons, not least in light of the fact that, a couple of days after publication, the government embarked on a national lockdown policy.

Two key areas highlighted within the letter as significant concerns for the regulator were firms' robustness in being able to counter mortgage fraud - described as an “inherent risk” within the sector - and the risk of cyber attack; which, if we're being honest, may be two sides of the same coin.

This is particularly instructive in terms of what happened during, and immediately after, the first national lockdown earlier in the year. According to Action Fraud, in March there were 22,785 recorded cases of financial fraud perpetrated against consumers, with losses totalling £92.3m. However, by July this had increased to 32,657 cases, with losses up to £356.6m.

Given the large sums involved in the mortgage market, we are always a target for criminals, but this threat has probably jumped during the pandemic and a further increase may follow the November lockdown.

The fraudsters may also feel a market that is said to be booming represents a good opportunity. Most attempted frauds are unsophisticated but throw enough mud at a wall and something may stick, particularly if stakeholders take their eye off the ball or are not diligent with checks.

When we are dealing with large numbers of cases, something may slip through. Advisers should be on top of, for example, their ID, payslip and bank account checking, as well as whether the individuals concerned actually own the property.

As the FCA rightly points out, this is not just a threat of fraudulent applications or attempts to siphon off deposit monies; it is also a cyber threat. Securing client information, data and payment details by hacking firms' systems is an ongoing threat and clearly the regulator has seen enough examples to warrant highlighting the requirements in this area.