24 Skyline | Relaunch Edition 1 | Winter 2021
It is very clear that mortgage firms and advisers should take fraud threats lightly at their extreme peril in 2021 !
Mortgage fraud
The FCA also reminded firms about the importance of having sufficient controls in place to prevent a firm being used to facilitate fraud and specifically confirmed :
1 due diligence on advisers , appointed representatives and introducers to ensure quality of business remains high ;
1 vigilance in checking for inaccurate or implausible information , including payslips , accountants ’ certificates , tax returns or bank statements .
Furthermore , in the most recent FCA Regulatory Round-Up , the FCA highlighted the risk of sharing log-ins , reminding firms that they are :
“... aware of Lead Generators offering to assist firms process applications , with firms allowing access to their systems , including sharing logins to providers ’ systems , to submit applications . Intermediaries should consider the risks in relation to accountability and liability in granting access to their own or providers ’ systems . Where individual access is granted , particularly to providers ’ systems , we would not expect logins to be shared , either internally or externally . If a generic login is used , firms should consider the security risks this presents and undertake appropriate due diligence on who accesses their systems , including third parties .”
It is very clear that mortgage firms and advisers should take fraud threats lightly at their extreme peril in 2021 ! Many high street lenders are reporting higher mortgage fraud activity than during the 2007 / 8 banking crisis and this is certainly mirrored via the increased monitoring and panel removal instructions I am being asked to assist with a present .
Income and employment fraud will no doubt continue to grab the headlines as this is inextricably linked to the LTV and criteria challenges that I have already mentioned earlier ( especially within the first time buyer sector ), so be extra vigilant when checking and verifying information and supporting documentation from applicants .
In particularly , be cognisant around the risks attached to employees returning to work after a period of furlough , along with future job offer promises and check their authenticity thoroughly . The self-employed continue to pose additional unique risks due to attempts to pass themselves off as PAYE and misrepresentations around work situation being positive and unaffected by COVID-19 when in actual fact they have had to rely upon Government assistance and loans .
Make sure that you re-visit appropriate training with all members of staff involved within the mortgage advice process ( advisers and administrators alike ) to empower as many people as possible with the knowledge and skills to be able to highlight any potential risks to your business .
And finally :
Governance and use of trading styles
Once again , the regulator is reminding firms about the importance of having appropriate resource and adequate systems and controls in place to properly oversee the activities of advisers and appointed representatives . The FCA highlight the following specific concerns :
1 Where there is significant growth in the number of advisers / appointed representatives , the FCA intends to contact the firm to assess if the changes made to the firm ’ s oversight arrangements , to reflect the increased risk , are appropriate .
1 Trading styles must be added to the FS Register . A trading style is where an authorised firm adopts a different name to its registered company name . In some cases , however , a separate and independent unauthorised firm is carrying out the regulated activity . This should not be registered as a trading style ; instead , this separate firm should either be directly authorised or re-categorised as an appointed representative .
So , in conclusion there is plenty for directly authorised mortgage firms to consider in 2021 as a result of the ‘ Dear CEO ’ letter and I would encourage all firms with the relevant mortgage permissions to download and review our Mortgage Intermediaries – A Signal of Intent from the FCA policy statement and complete the ‘ Record of Action Taken – Dear CEO Letter ’ template that forms part of the document . The download also includes lots of useful guidance , links and recommendations in order to help you demonstrate adherence to the rules and ensure a clean bill of health should you be asked to take part in any thematic reviews this year .
This update is held on the Mortgages site under Compliance – Centres of excellence and was a communication sent out to firms on the 8th December – title : Mortgage intermediaries – a signal of intent from the Financial Conduct Authority ( FCA ).
Until next time ...