Edna Young, strategy specialist at the FSA, warned that some lenders had not applied anti-fraud controls on their high risk products such as bridging loans, packaged cases and sub-prime loans.
The FSA said it had concerns that underwriting staff appeared stretched in some lenders and that a demand in service-level standards, designed to ensure customers received timely responses, could compromise an underwriter’s ability to identify suspicious applications.
The FSA said: “We expect firms to consider mortgage fraud risks when designing new lending products and factor any additional risks into the decision-making process.
“A future upturn in lending could aggravate these weaknesses. We were not convinced that some firms would be able to expand their underwriting teams’ anti-fraud capabilities in response to a growth in lending.”
