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FSA warns of mortgage fraud threat
The Financial Services Authority (FSA) wants more action to tackle the growth of mortgage fraud.
Concerned that the current troubles in the housing market could encourage illegal practices, or bring to light instances of past malpractice, the financial regulator revealed yesterday that the number of mortgage brokers who have been banned from practice has nearly tripled in the last year.
The FSA fears that brokers face increasing temptations to break the law because they are struggling to make a living in the wake of the credit crunch.
Last week a mortgage adviser from Kilmarnock-based firm Mortgage Masters was banned and the firm fined nearly £12,000 after the adviser, Ian Sanderson, was found to have deliberately inflated clients' incomes to secure their mortgages.
The FSA now has a joint project with the Council of Mortgage Lenders, which represents the lending institutions, to encourage the reporting of malpractice. This has led to the banning of 17 mortgage brokers this year, compared with six in the whole of 2007. However only 35 of 150 UK mortgage lenders are taking part and the FSA aims to increased this number.
Philip Robinson, the FSA's director of financial crime and intelligence, said that mortgage fraud was a serious and widespread problem and that the FSA expected the industry to do its part in tackling the issue.
The FSA is also considering changing the rules so that individual mortgage brokers and intermediaries have to be approved, rather than the firms they work for.