Speaking at today’s Association of Short Term Lenders Conference 2015, Jonathan Newman, senior partner at Brightstone Law, told firms to put fraud prevention at the centre of their business model – adding that identity fraud represents the greatest threat.
Ominously he admitted that nobody really knows how big a problem fraud is within the industry as lenders aren’t keen to publish data on the subject.
He said: “When The Law Society flags up non-bank lenders they mean you guys because they think that the fraudsters perceive the short-term lenders as being soft targets with softer underwriting processes and lacking in due diligence.”
Newman ran through common “warning signs” that lenders should look out for: The borrower may be geographically far away from the property and the solicitor, while he/she may be acting overly anxious or act detached from the transaction.
In order to beat fraud he said firms must instil a culture of fraud prevention and have an experienced team – while they should remunerate employees who catch fraudsters in the act.
He added: “They all say that their members should have appropriate remuneration structures and these should incentivise detection of fraud but not encourage overlooking fraud risk to achieve sales.”
