Brokers and support staff should be on high alert for borrowers trying to ‘stage income’ as part of fraudulent mortgage applications, delegates heard in a regulation and compliance update at the mortgage administrator iVENT 2020.
Staged income is where applicants falsely represent their earnings in order to qualify for affordability and confirm employment.
In his online presentation, Paul Fothergill, compliance policy and regulatory development manager at Sesame Bankhall Group, said: “One of the most common things that’s been seen over the last few weeks is staged income.
“An example would be where a customer has recently started a new employment to supplement existing income or they start receiving a significantly higher income a few months prior to applying for the mortgage.”
Fothergill warned it can be difficult to spot fake payslips or bank statements as realistic imitations can be easily obtained from the internet.
However, there are steps that can be taken to make sure fraudulent applications are stopped in their tracks.
Fothergill said don’t “take things the customer says at face value” always cross reference statements and check information that is provided.
Overall, administrators need to consider the “plausibility for the whole picture” of the customer.
This means ask for further payslips where something doesn’t make sense or feel quite right.
He recommended looking for inaccuracies on payslips – check the company name against Companies House.
Common errors on fake payslips are tax codes that don’t match up.
Aside from fraud, Fothergill spoke about the Financial Conduct Authority (FCA) and its concerns around vulnerable customers in the current climate.
The regulator feels the coronavirus pandemic is likely to increase the number of vulnerable customers.
No specific type of person can be classed as vulnerable, so brokers and administrators talking to customers need to try to pick up potential issues through conversations.
Where a customer is identified as vulnerable, processes should be adapted to make sure they don’t suffer any detriment.