I have some bad news for you, although some of you may consider it a blessing. If things go my way, this will be my second and last column for Mortgage Introducer. You will only be able to contact me via my web blog, which will inform you of my travels around the world and the ways in which I will be spending my new-found riches.
I shall explain. On finishing my previous column an e-mail landed in my inbox informing me that I had been earmarked for a considerable amount of money. Now, while I was hoping this would be generated by the National Lottery, this is not the case. Instead, it comes from a gentleman, who, to be honest, I don’t recall ever meeting, but assures me we’ve had a ‘long and fruitful’ relationship. Anyway, more importantly, his ‘long and gracious friend’ (i.e. me) is the beneficiary of a considerable amount of money. It sits waiting in a bank account and I am very excited about it. All I need to do now is access it. This is, I’m assured, very easy.
Therefore, I’m currently in the process of sending him my bank account details and a finders’ fee to ‘free up’ my cash. It’s a £20,000 fee but when you consider the money I’m going to get, it is but a drop in the ocean. So, bring on the holidays, cars, houses and, most importantly, champagne. I’m also sending e-mails to my bank and credit card providers who need my internet passwords and account details – just to check their security systems are up to scratch, you understand. After all, I want their systems to be as secure as possible. Heaven forbid someone ‘unsavoury’ gets hold of my details and plunders my soon-to-be-accrued millions.
I jest of course. Don’t worry mother (she’s an avid reader of MI) I’ll do no such thing. I know it’s a scam. But, it makes the point that there are plenty of ‘undesirables’ out there who will attempt to get our hard-earned cash or defraud us by any means necessary. Now, this might be privately or it may be through our places of work. It’s therefore up to us to put in place systems and controls which combat these ‘darker elements’.
Stepping up the fight
You may have seen the FSA unveiled the next step in its fight against mortgage fraud last week, concentrating on the information it receives from lenders on fraudulent activity by mortgage intermediary firms. The initiative aims to open up a more structured, streamlined reporting system between lenders providing this information and the regulator. It seems that while some lenders were providing this information as a matter of course, others were not. And while this is still a voluntary initiative, a pilot study has already been completed and four intermediary firms have been referred for possible enforcement action.
AMI supports any move to combat mortgage fraud as it is detrimental to the whole marketplace – consumers, intermediaries and lenders. The good reputation of the mortgage industry, especially that of intermediary firms, must also be defended at all costs. To that end, we have provided information to members via a factsheet on fighting fraud in their own businesses and ensuring they meet their FSA obligations. Internal fraud risks, for example, could involve employees attempting to abuse their position as part of a wider fraud or working to defraud a lender.
Leading from the front
It will be no surprise to you to learn that the FSA expects senior management of firms to be leading from the front when it comes to fighting fraud. Responsibility for the anti-fraud culture of a firm is comes down to the bosses and the regulator expects to see a clear allocation of responsibilities for the day-to-day management of the financial crime risk. It also wants to ensure there is sufficient staff training for employees to identify and tackle potential fraud.
The AMI factsheet also gives members a basic checklist of questions to help them understand and tackle fraud risks. Answering these questions will allow firms to identify gaps in their systems and controls. Some of the questions include: who is responsible for managing your fraud? how do you identify your key fraud risks? what are your key systems and controls for managing your fraud risks? how do you monitor the effectiveness of your fraud systems and controls? what whistle-blowing arrangements do you have in place and how successful are they? and what are you doing to warn customers about how to protect themselves?
Answering these questions should give the firm, especially smaller ones, the necessary information to address possible fraud risks. It is the small firms, after all, that may be more vulnerable and the impact of serious fraud could severely damage not only their reputations but their ability to exist. They may be institutionally and perhaps systemically less protected.
So, the message is to consider your firms’ ability to identify and tackle fraud. Do you have the systems and controls in place or are you opening yourself up to the mortgage equivalent of my ‘friend’ offering the huge sums of cash? Now is the time to protect yourself.
AMI members can access the Fraud Prevention factsheet on the publications section of its website, which can be found at: www.a-m-i.org.uk/closed/cug/publications.asp.
