Tackling financial crime is one of the Financial Conduct Authority’s Business Plan priorities and having initially focussed on the mortgage market, the regulator is now looking to expand its fraud-busting Information from Lenders scheme to the motor finance sector.
The scheme, which is voluntary, is designed to provide a reporting mechanism for lenders suspecting an intermediary (broker), be it a firm or an individual, of fraudulent activity.
The decision to extend the scheme from mortgages to other sectors, starting with motor finance, comes off the back of a stream of successful enforcement activities and takes into account the fact that motor finance is the next largest debt for consumers after a mortgage.
During the past two years, 22 mortgage lenders have reported 317 cases of suspected fraud by intermediaries, resulting in action being taken in 91 cases. Between 2014 and 2016, the scheme attracted 200 reported cases which contributed to the regulator issuing fines of over £2 billion relating to fraud.
Explaining what is expected from lenders, the FCA website states:
“You are responsible for making sure your business is not vulnerable to fraud. We expect you to help us win the fight against financial crime. The IFL scheme helps your firm and others in the industry fight fraud, reduces the chance of your firm being used to commit financial crime or facing a loss because of it.
“We hold lenders responsible for weak fraud controls and will forcefully pursue any poor systems and controls by supervising more intensively and using enforcement action where appropriate.”
The BVRLA is looking to seek the views of funders to determine whether the voluntary Information from Lenders scheme is something that the association and its members would look to support.
Likely requirements of funders will include:
· having robust and proportionate resources, systems and controls in place so you can identify, detect and prevent fraud
· making fraud detection and prevention a key part of your business
· having senior management being responsible for managing fraud risks, overseeing, owning and regularly reviewing the control framework’s effectiveness
To discuss this further or to take part in a roundtable discussion with the FCA contact BVRLA Senior Policy Advisor, Jinmi Macaulay.