UK FSA bans broker for failing to prevent mortgage fraud

The UK Financial Services Authority (FSA) has banned a London-based mortgage broker for incompetence and failing to prevent fraud. The authority said Kevin Byrne, working at Forest Financial, lacked the integrity and competence to prevent his business being targeted by mortgage fraudsters.
       
The FSA says its investigation revealed Byrne accepted mortgage referrals from an introducer but failed to undertake due diligence or any basic checks on client information supplied by the introducer. As a result, he submitted seven mortgage applications containing false and misleading information, and at least one customer did not exist.

Since the regulator’s mortgage review last year it has taken a growing number of enforcement actions. This year the FSA has already banned six mortgage professionals (one of whom was also fined) for fraud or incompetence. The regulator has also fined one firm, while Forest Financial becomes the second firm to have its permission cancelled.

The regulator said Byrne’s lack of due diligence led to mortgage applications being submitted with erroneous or fraudulent information. He was found to have certified a number of supporting documents despite never having seen the originals. False passports were used to acquire mortgages and a bank statement for one applicant contained differing sort codes and account numbers on different pages.

“This made him an easy target for the introducer to obtain mortgage advances from lenders on a fraudulent basis, which could have been prevented if Forest Financial had put in place basic financial crime checks,” said Margaret Cole, director of enforcement and financial crime at the FSA.

The regulator said Byrne confessed that no systems or controls existed at the firm to reduce the risk of the business being used to commit mortgage fraud.

“This prohibition serves as another warning to mortgage brokers who accept business from introducers in suspicious circumstances without doing the proper checks,” said Cole.