he threat of fraud is one of those things that hangs over us like a perennial dark cloud, waiting to soak us at a moment’s notice. We are told by a variety of figures that we must be continuously on guard to ensure that we are not the next victim, as we may be struck down at any time, whether it’s at the cinema, the supermarket or even in our own homes.
However, like the constant threat of terrorism, we go about our day without a paralysis of fear, placing our trust in the security services and the government to keep us safe. This balance of trust is usually taken as a given and it is only when something comes to light which questions that faith that we linger on how much danger we are really facing.
An example of this occurred recently, when it became apparent that the Land Registry could be used as a conduit for potential mortgage fraud.
First there was a case in the West Midlands, which saw members of a criminal gang posing as prospective buyers for property in the area. However, instead of being genuinely interested, they were using the process to garner information to claim the title deeds at the Land Registry before remortgaging the home without the owner’s knowledge, and raking in at least half a million pounds in the process.
More seriously though, was the allegation that for under £10, an individual could access information on a property, including the mortgage and the title deeds, via the Land Registry’s website. Available to anyone who registered was a variety of sensitive information which could lead to any number of fraud opportunities, including details on the mortgage and the owner’s signature.
Shocked at the simplicity
The industry was shocked at the simplicity at which personal information was available. Alan Dring, sales director of e-Conveyancer, comments: “It’s mad that they can get access for a pittance. With electronic fraud being so massive now you would have thought they would do everything possible to stop it, especially as the information is about something which an Englishman holds so dear to him – the keys to his castle. It is totally irresponsible and if it is so blatantly obvious so as if to violate data protection, the details should be protected.”
The Land Registry insisted that an open register was a normal practice and that it had no knowledge of any cases where the information had been used fraudulently. In a statement, it claims: ‘The 2002 Land Registration Act extended the open register and made copies of mortgage deeds and leases available. These provisions were the subject of extensive public consultation and debate in Parliament. In many other countries in the EU and beyond, registers have been open for much longer. An open register is the norm.
‘There is no evidence that fraud has resulted from the availability of this information from Land Registry. If we receive evidence of a security risk, Land Registry in conjunction with the Ministry of Justice and the Home Office will of course investigate.’
The horse has bolted
However, promising to investigate should something go wrong draws comparisons to shutting the stable door once the horse has bolted. As Dring insists, ‘it can’t deny this is a loophole,’ bypassing many of the checks and balances put in place by mortgage lenders and brokers to stop fraud from happening. Having an open system is based on trust and for it to work, public confidence must be retained. Otherwise, the system breaks down and a situation occurs where people are left wondering when it will be their day to be targeted.
One avenue through which this could be tackled is the current consultation on e-conveyancing, which was launched this month by the government. This is supposed to facilitate a quicker and smoother conveyancing process. However, the government surely wouldn’t want to sacrifice security for speed so the publicity which has been created around the area will hopefully see it addressed.
How big a problem?
All this does beg the question though, how big a problem is mortgage fraud? According to Christopher Dean, spokesperson for the Council of Mortgage Lenders, lenders have plenty of resources employed at reducing fraud as much as possible.
“The anecdotal evidence is that mortgage fraud is very low. Lenders have specific people to look at it and have systems in place to track any cases which they are suspicious of. Lenders are also pooling information now as an industry response to reducing fraud.”
Therefore, if lenders and brokers are on the ball and keep doing everything they’re doing now, the constant threat will remain but we won’t have to lock ourselves away in doomsday bunkers to ensure our safety, or fear we’ve just disclosed our client’s data to every dodgy Tom, Dick and Harry on the web.
Whatever the terror threat level may be, go out and enjoy the rain. The end is not nigh – at least not yet anyway.
