The latest research from CIFAS has identified a decrease in fraudulent
cases during 2013. According to the latest numbers from the fraud prevention
service, an 11 per cent reduction was recorded from the previous year; which
was the first year-on-year decline since 2010.
It’s all very positive news until we learn that fraud continues to
remain at a higher rate than ‘pre-recessionary times’, so we still have some
way to go.
When looking at why the drop has occurred, it is positive to note that
increased investment in fraud detection and prevention technology, including
data sharing, has been a key factor.
It doesn't however mean that fraud has stopped altogether: in fact with
more systems being deployed to stop such crimes from occurring, fraudsters are turning
their attentions to targets that appear more ‘vulnerable’. For example, fraud against loan accounts,
including secured, unsecured and payday loans went up by 55%.
So, while the overall figures paint a fairly optimistic picture, we
must continue to be on our guard against fraud.
In particular, next month, we see the implementation of the Mortgage
Market Review recommendations. With a
host of new rules and procedures coming into force, including greater scrutiny
regarding applicants’ affordability, are we in fact simply witnessing the ‘calm
before the storm’?
With borrowers having to provide more detailed assurances that the loan
is appropriate to their financial circumstances, we will be closely monitoring
whether this has an impact on application fraud, such as an upturn in false
income declarations or non-disclosure of debts, for example.
We are working with our lender clients to ensure that relevant fraud
alerts are in place on their risk dashboards so any potential impact is
identified as early in the process as possible.
This includes attempting to go ‘under the radar’ and instead access
funds via Buy-to-Let products, where income verification isn’t a requirement.
Time will tell, however risk-based IT systems are ready and in place to
safeguard lenders from a wide range of risks. It will be particularly
interesting to see what effect the new regulations have on both mortgage
volumes and incidences of application fraud.
Richard
Groom, Product Development Director, Landmark Quest
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