AMI hits back at lenders over fraud risk slur

The Association of Mortgage Intermediaries (AMI) has hit back at lenders who claimed third parties, including brokers, represented some of the industry's biggest fraud risks.

Robert Sinclair, AMI director, said lenders had responsibilities of their own and pointed out their direct sales staff can also be involved in fraudulent transactions.

Earlier, lenders had flagged solicitors, brokers and surveyors as major risks in the fight against fraud. The concern appeared in the FSA's thematic review of lenders' systems and controls, published yesterday.

But Sinclair (pictured) said: "We continue to support the drive to reduce the level of fraudulent activity in the mortgage market.

"However, for mortgage fraud to be prevented all parties must be diligent, including lenders and solicitors," he said.

Sinclair said lenders should always be "diligent when reviewing their broker panels but any action taken should be appropriate and proportionate."

A mortgage adviser register is an idea AMI has always supported, and Sinclair said it would be useful for the industry to be able to identify rogue operators and stop them moving between firms.

"We are therefore disappointed that FSA has delayed the introduction of individual registration for mortgage sellers until at least 2013," he said.

In yesterday's thematic review the FSA said that, despite improvements in lenders' oversight of relationships with solicitors, there is scope for "significant improvement" in how lenders manage relationships with brokers.

It said it was concerned some lenders relied solely on a mortgage broker's entry in the FSA register to vet them.

"Checking the register can be the first step of a due diligence process but it cannot be regarded as sufficient to provide complete assurance," it said.

"Recent FSA enforcement action has shown very clearly that even FSA approved brokers do not always act with integrity or take steps to mitigate mortgage fraud risk.

"Lenders must take steps to satisfy themselves of a broker's suitability on an ongoing basis," said the regulator.