Karen Bennett, Shawbrook Bank's Head of Sales, Commercial Mortgages, talks to B&C about where the responsibility for fraud lies within the industry…
Fraud. It’s an idea that gives even the most hardened of lenders a sleepless night, and the phrase on everyone’s lips has now become ‘due diligence’. However, approaches vary among lenders, and with no hard and fast rules there are differing views on what is best practice.
At Shawbrook, we believe that due diligence is arguably more of a concern than credit risk, with the reality of fraud representing a potential total loss. Our legal and compliance department are dedicated to ensuring we’re covering off the necessary checks. As a bank, we’re responsible for protecting our depositors’ funds and we constantly review our practices to ensure our team puts proper levels of care into every transaction.
That said, it’s also easy for lenders to be over cautious. It’s all very well for a lender to demand endless form-filling and box-ticking, but what about the brokers who are expected to deal with this extensive list of requirements and checks?
Fully understanding a client’s identity is essential; we need to be certain it makes sense before we can move forward. At the same time, there has to be a balance to ensure that, while a lender never cuts corners, they’re not making the process so long-winded that it becomes untenable for broker and client.
Luckily, there’s an ever-changing array of technical services available to assist lenders with completing additional due diligence quickly. We try to be as progressive when it comes to due diligence as we are with our lending products, and are committed to constantly reviewing our practises and looking for the best ways to be thorough without slowing the process down.
So, does the lender have ultimate responsibility for ensuring all the necessary due diligence takes place? What about brokers? Where does the buck really stop? And who is to blame when things go wrong?
Perhaps we’re missing the point here: fraudulent activity happens in the lending industry. It’s a sad reality, and something lenders and brokers alike will always need to be vigilant of as it can have a negative impact on all involved. We should all take responsibility for validating information, and perhaps, rather than looking for a scape goat when things go wrong, lenders and brokers should work together to spot questionable behaviour early on.
We are all at risk of being victims of fraud. Let’s work together to stop risk becoming reality.
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