CLC responds to mortgage fraud Call for Evidence findings
7 December 2011
The CLC has issued an updated mortgage fraud Practice Note for all regulated individuals and entities following its Call for Evidence earlier this year.
The Practice Note provides information on the known activities of fraudsters, details of situations and transaction types which are likely to require particular caution and examples of good practice.
The National Fraud Authority estimated that the cost mortgage fraud was around £1 billion in the United Kingdom last year.
Due to the relatively large number of high value transactions taking place, the conveyancing market is deemed to be at particular risk.
It was in response to this continuing climate of mortgage fraud that the CLC launched its Call for Evidence on the subject in July. An initial Summary of Feedback was published in August.
A number of respondents to the Call for Evidence suggested that the CLC provide regular updates containing informal guidance on the prevention mortgage fraud. Our attached Practice Note begins this process.
Representing both buyer and seller was also raised as an area with cause for concern.
The new CLC Handbook allows those we regulate to represent both parties only where they are confident that to do so does not represent a conflict of interest.
We believe that the provision of arrangements allowing service providers the freedom to represent both parties – where this is no such conflict – to be consistent with our outcomes-focused approach to regulation.
Part of this shift in regulatory approach will see us focus regulation on firms using unqualified or inexperienced staff. All applicant bodies will need to demonstrate that that they have appropriately qualified, experienced and supervised staff. In this licensing year, November 2011 to October 2012, CPD provisions will also be focused towards mortgage fraud.
We will also remain alert to firm takeovers; under the Licensed Body (ABS) Licensing Framework, an individual seeking to acquire 10% or more material interest in an ABS, or someone already holding such interest and seeking to acquire further interest, must notify the CLC.
Recognised Bodies are also required to notify us promptly of a change of ownership. In both instances, we will then decide whether or not to approve such acquisitions.
Finally, we will be increasing the level of information regarding individuals and practices available on our website.
From 6 October 2011 the CLC will be publishing formal determinations online. In addition, a Licensed Body (ABS) register will also be available on our website.
The register will state if an entity’s licence has been suspended or revoked, the date at which this took effect, as well as any enforcement action or sanction on the Licensed Body, its owner or any employee.
Once again we would like to take the opportunity to thank all those who helped inform our response to this important issue.
It is our hope that by working closely with regulated practices the CLC can help to significantly reduce consumers’ exposure to the effects of mortgage fraud.
Article provided by CLC staff
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Mortgage Fraud Practice Note
