Council of Mortgage Lenders advise on conveyancing fraud

Jennifer Bourne is Senior Policy Adviser at the Council of Mortgage Lenders. With CML’s seventh annual fraud conference taking place in London on November 12, she tells Today’s Conveyancer what solicitors should watch out for when it comes to impersonators and how fraudsters are becoming ever-more sophisticated…

What can attendees expect at this year’s Fraud: Awareness and Prevention conference?

“We have one major fraud conference a year and they’re always pretty well-attended. There were nearly 100 people last year and the feedback we received was positive.

“In terms of the audience we have a mix of our own members, fraud specialists, people from the legal sector, representatives from government bodies such as Land Registry, fraud technology specialists and guests from the conveyancing market.

“It’s an interesting area — there’s always something new in the evolution of fraud. If some of these fraudsters invested their times in legitimate business activities they’d be very successful — that’s how clever and dedicated they are. They’re always looking at new areas so when the market becomes wise to one trick they’ll invent another.

“This year the conference is looking at the impact of the mortgage market review on mortgage fraud; we have someone from City of London police talking about how they interact with the National Crime Agency; lawyers discussing data protection issues so what can and can’t be shared that might limit fraud; professional negligence specialists; various technology experts and lenders talking through their own experiences of fighting fraud.”

In your opinion do the police take fraud against business seriously enough?

“I’m a policy adviser at CML responsible for looking at how the mortgage lending industry can tackle fraud issues collectively, where possible. Obviously each lender has a financial crime team and a fraud team to investigate the cases but I know that in the past some have felt frustrated that they’ve come, bearing everything they can possibly provide, to law enforcement agencies only for the cases not to be taken forward because of other priorities.

“It’s not that the police don’t take business fraud seriously but, historically, they don’t necessarily prioritise it the way we or our lenders would wish. Saying that, I have the sense it’s improving — the National Crime Agency has been around for a year in its current form, looking at fraud among other things, and hopefully it’s going to help focus and centralise some of the law enforcement activity around fraud.

“Cybercrime is quite high on the government’s agenda now — phishing for an individual’s bank account details, for example. And phishing goes on in business too so all of this creates more awareness about fraud and places it higher on the police radar.”

What are the big issues in conveyancing fraud at the moment?

“Probably a mix of the old and new — for example, there’s still a concern around vendor solicitors and the impersonation thereof, so people masquerade as a seller’s solicitor to take through a mortgage transaction that isn’t all it seems and access those funds. And that’s tricky for lenders to tackle directly because obviously their relationship is with the borrower. So it comes down to checking the conveyancer is legitimate. The recent case of Santander v RA Legal is an example of vendor solicitor impersonation.

“On the new side of things, I’m hearing about property hijacks, where the fraudster identifies an unencumbered property that doesn’t have a mortgage on it and attempts to raise a mortgage.”

What can conveyancers do to fraud proof themselves?

“A lot of it is common sense. If a vendor’s solicitor doesn’t have a business phone number, is writing from a Gmail or Hotmail address and seems reluctant to meet face-to-face — obviously those things may raise red flags and trigger further checking. And conveyancers should always cross check a law firm branch they haven’t heard of against the SRA and the CLC.

“But it’s getting tougher, definitely — these fraudsters can present a very compelling face. They can access notepaper from a legitimate firm and find out a partner’s name. All that information is so easily available. Requesting face to face meetings with the other side in a conveyancing transaction can help — arranging to meet the vendor’s sellers at their offices, for example.

“And staff checks are important because, sadly, fraud does occasionally take place from inside a company. That’s particularly dangerous as it can damage a firm’s reputation forever.

“As for getting insured against fraud — well, that’s a tricky one. Professional indemnity insurance won’t necessarily protect against fraudsters. Insurance can’t really be used as a prevention tool because then the options for it to become another way to profit from crime come into play. It’s complicated.”

Have there been any big convictions in conveyancing fraud?

“There have certainly been big convictions for fraud — the Wolstenholmes LLP case being an extreme example of improper and fraudulent practices by solicitors leading to losses in the millions of pounds for clients.”

What sort of technology is available to fight fraud?

“Many and various — lenders, for example, employ screening tools and cross check against various databases that are out there. A few of our members have now put together a central database for registering and checking those who are going on their panels so the particulars of every conveyancer are now scrutinised.

“But lenders have had to get tighter on this since the credit crunch. They can’t afford to take risks and there’s a regulatory requirement that third parties — conveyancers and brokers and valuers — are all checked. Onerous questions do have to be asked.”

Other than fraud, what are the major issues affecting the UK mortgage industry today?

“There’s a need for the market to adjust to the new regulatory rules that came in at the end of April. It’s gone relatively smoothly but there’s still a bedding-in that has to happen so that lenders and borrowers alike can settle.”

*Tickets to the CML’s Fraud: Awareness and Prevention conference on Wednesday November 12, 2014 are £385 to members and £505 to non-members. (Both prices are VAT exempt.) Buy them on-line at www.cml.org.uk

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