Mortgage brokers urged to report fraud

Mortgage lenders focusing on high volumes instead of high quality are responsible for creating an environment in which fraud can flourish, according to the Financial Services Authority (FSA).

The FSA's head of financial crime policy and intelligence, Bob Ferguson, told visitors at the Mortgage Business Expo that the authority will encourage lenders to report fraud.

Mr Ferguson said that the Information from Lenders Project, which led to lenders and brokers reporting 250 cases of expected fraud, is set to be expanded in July.

Brokers will also be asked to report fellow professionals who fail to maintain the high standards expected of them.

However, he admitted that the number of cases of fraud will probably reduce as lenders become more cautious about who they lend to, noting that it is harder to commit fraud when there are tight lending conditions.

He said: "We often find that fraud follows the economic cycle. As the mortgage market begins to shrink, we will start to see the incidence of fraud falling as well."