Clampdown on mortgage fraud by lawyers saves lenders £15m
A campaign by the Solicitors Regulation Authority to target solicitors involved in property fraud has saved lenders £15-20m over the past nine months, the SRA claimed this week.
Its inspectors have made emergency inspections of firms where property fraud was suspected and the SRA has given guidance to solicitors who might become involved in such transactions unwittingly.
The campaign followed concern about rising levels of property fraud. SRA figures showed that reports of suspected property fraud increased from 85 in 2005 to 356 in 2008, and it dealt with more than 400 reports in 2009.
In 2009 the SRA completed 106 investigations into firms where there was suspected misconduct in relation to mortgages or property. Of these, 22 firms have been closed down by the SRA, 24 cases have been referred to the police for investigation and 30 cases have been referred to the Solicitors Disciplinary Tribunal.
The SRA has issued advice and warnings to all solicitors’ firms, alerting them to the warning signs of suspicious transactions, and reminding them of their obligations to ensure they do not become involved and to report any suspicions.
Steve Wilmott, head of the SRA’s fraud and confidential intelligence bureau, said: ‘Last year the SRA stepped up its work to prevent, deter and tackle mortgage fraud. We’ve recruited two dedicated fraud officers, increasing our fraud unit to 18.
‘Mortgage fraud is a serious issue for homeowners and lenders. We are working closely with major lenders and the police to share intelligence and take prompt action.’
Dan Watkins, managing director of mortgages for Lloyds Banking Group, said: ‘The financial services industry faces a serious and continued threat of mortgage fraud that is orchestrated by rogue solicitors. Lloyds Banking Group supports all efforts that are made to combat this threat.’
Detective superintendent Robert Wishart of the City of London Police said: ‘We are committed to working closely with the SRA during 2010 and beyond to target corrupt solicitors who we believe are a significant enabler of property fraud.
‘Working in collaboration will help us to better understand the threats and give us the opportunity to take preventative and enforcement action to protect the financial community.'
Comments
Fraud
A Firm where I worked several years ago were recently taken down due to a mortgage fraud perpetrated by oneof their partners. The partners of that Firm all encouraged a culture throughout the Firm that greed was good, and money money money was all that mattered rather than clients. All sorts of corners were cut to increase the number of clients and costs billed. With that sort of culture rampant it was no surprise to me that one of the partners of less intellect acted how he did, probably just to try and keep up with the avarice of his more senior colleagues.
I left the Firm six years ago warning that, with a new MAnaging Partner in place of questionable competence, something like that would happen. But because I was an unqualified conveyancer the view was my opinion did not matter. Well I was right.
With self regulation such as that, is it any wonder that frauds are perpetuated? I know it is a highly isolated case, but the Firm I moved to broke rules hand over fist in other ways. And when I reported them to the SRA they were totally uninterested. So things just get worse. It is for suchreasons I have now left the legal profession, as I have found it is an institutionally corrupt profession in bad need of a clean up.
I was interested in the above
I was interested in the above two comments,as several years ago I was employed by a firm that was closed by Law Society intervention a few months after I had been hired. Although I had alerted the Regulator to malpractice by my employer, I was subsequently seen by other potential employers as "tainted by association",despite my having done everything possible to rectify my former employer's malpractice. I was never subsequently able to get another suitable job. What is the moral of this story? If you as an employee,or partner for that matter, suspect malpractice,head for the exit as soon as possible and try and get yourself another job before the firm is closed. If you leave it too late, you run the risk of being seen as "tainted". Also, do as much research as you can as to the integrity of any potential new employer. And don't just assume that because they are solicitors they must be honest. They are not,although thankfully, most are.
SRA Interventions
You can see from threads on Money Saving Expert that the public are concerned as to whether the SRA are moving quickly enough.
A lot of questions still remain unanswered when it comes to the intervention of Wolstenholmes , albeit that that particular intervention does not seem to relate to mortgage fraud.
SRA interventions
I wonder if the cost of these interventions has been budgetted for? Obviously, they are essential, but the they seem to be running currently at about 2 a week. The average cost is about £250,000 and the rule of thumb is that it costs about £1,000 per active file. This would tie in with the fact that a lot of the intervened firms are obviously very small.
However, the Wolstenholmes intervention seems to be particularly large. Many of those involved have been posting in the Mortgages section of the Money Saving Expert forum and there seems to be a consensus that the intervention agents are having to employ over 100 on the job and that the number of files runs into the thousands.
Some of those with early claims for compensation have been giving details. Ominously, the first 2 are for £20,000 each.
Some elementary arithmetic puts the cost of this intervention alone at £5 million plus. The net amount of compensation paid depends very much on how much is available in the frozen client account. However the SRA must have a view on whether there is going to be enough money available for the interventions and to compensate those who have suffered loss.
I think we ought to be told if the profession is going to have to pay some huge levies in future to compensate the victims of the thieves and con artists who have been allowed to blight the profession.
The other big question is whether the SRA has been intervening early enough? There is genuine anger among the honest firms at the way the activities of the rogues have been tolerated for so long.