Under FSA regulation if the broker fails to spot forgeries they are not liable for sanction, they must however demonstrate that every care was taken when inspecting documents.
According to Northern Ireland-based commercial and buy-to-let broker Michael Donnelly, proprietor of Annex Business Consultants Ltd, a company recently offered to supply him with false documentation including most worryingly a duplicate passport.
“According to the FSA a broker must ‘know their customer’ but how could most intermediaries spot a fake? Surely a broker can’t be expected to be an expert in detecting forged identification as well as all the other areas covered in regulation,” said Donnelly.
Chris Cummings, director of the Association of Mortgage Intermediaries (AMI), said brokers should show they had taken all reasonable measures to detect fraud.
He said brokers were duty bound to inform the authorities if they were suspicious of a client. He also cautioned that if a broker spotted a fake they could be prosecuted if they warned the client before reporting them.
“Unlike lawyers we do not have a duty of confidentiality,” said Cummings. “Mortgage intermediaries can’t work for any old crook and keep their secrets.”
Ray Boulger, senior technical manager at Charcol, said: “I was at a conference recently where a forensic auditor said there was an offshore website offering fake ID that was so good it could even fool experts, and for only £1,000.”
