If you choose to become a mortgage advisor after your CeMAP training course (and subsequent CeMAP qualification), your actions can have significant consequences for those you take on as clients. For one London mortgage advisor, the temptation of fraud obviously proved too much.
Thanks to a South London based mortgage advisor, one police constable faced a disciplinary investigation by his police force. According to the officer’s mortgage application, he earned £68,000 and worked part time as a security consultant. Yet neither was true.
According to the FSA’s (Financial Service Authority) case papers, this un-named police office was a customer of a South London mortgage advisor, Byron Brown. Mr Brown apparently told his client to “leave out the earnings part” of the mortgage application, but afterwards deliberately entered false information and the policeman didn’t see the completed form until his subsequent investigation.
Now Mr Brown has joined the other 16 mortgage advisors banned for fraud so far this year with another 24 cases still going through the FSA’s enforcement process.
Many may believe that this sudden increase of fines and bans of mortgage advisors is because mortgage advisors are struggling, however, it seems they are coming to light because as lenders are tightening their conditions and house prices are weakening, more people are getting themselves into arrears. This is exposing fraud from some time ago.
In some cases, the borrowers themselves have inflated their income figures but the FSA is also exposing a number of mortgage advisors who have falsified the information themselves. The FSA is able to levy a fine or even ban a mortgage advisor for life. The purpose of a fine is for two reasons, the first being:
“to strip any ill-gotten gains, the other is to impose a penalty that is both a penalty and will act as a deterrent”
The 17 bans so far this year seem high compared to 6 in 2007 and just 2 in 2006, but the FSA insists this is not due to an increase in fraud but more due to their increased focus on detecting any fraudulent activity.
According to Ray Boulger of John Charcol, a mortgage broker firm, many mortgage advisors agree. He said:
“There’s a good argument for saying that in the initial period from 2004, when they took on mortgage regulation, the FSA was not really on the ball. It’s almost a case of they were not doing their job as well as they should have been.”
The FSA has made efforts to encourage mortgage lenders to highlight any suspect mortgage applications. An FSA spokesperson, Margaret Cole, said:
“To have an impact on smaller firms you’ve got to have more cases with more risk of people getting caught. We want to get these people out of the industry and we’re calling on the lenders to help – it’s in their interests. There is a very human, individual story in this, too. We do see cases where these applications are just purely fraudulent in the sense of very disadvantaged, vulnerable people who don’t know that their application was inflated and therefore end up with a much bigger mortgage debt than they ever expected to have – and the problems that go with that.”
Thankfully, for every dishonest mortgage advisor out there, there are hundreds of honest mortgage advisors. When you get your CeMAP qualification, make sure you bear that in mind. Being honest and hard-working will get you plenty of referrals, plenty of business and plenty of income 🙂