The ASTL on the future of fraud prevention

The ASTL on the future of fraud prevention




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The chief executive of the Association of Short Term Lenders, Adrian Bloomfield has been sharing his views with us on how the ASTL will tackle increasing levels of unscrupulous behaviour and fraud in 2009. 

 

Speaking from the offices of Jeffrey Green Russell, where he is a retained consultant to this well established law practice, which lists commercial and short term lending as one of its core competencies, Mr Bloomfield spoke of the downturn sparking a rise in dishonest industry practises:

 

“As you will have noticed, 2008 was not a great year for the banking and financial services industry. It was a most extraordinary set of circumstances and I don’t think anyone at the beginning expected it to lead to what it has led to.” Mr Bloomfield said.

 

“No members of the ASTL have been implicated in allegations of unscrupulous practices, but we understand that there are people who are unscrupulous and dishonest, who claim to be able to provide loans and then charge very high fees for people to apply for them. They don’t provide the loans, and then keep the money. I hope people will get wise to it.

 

“The borrower should only use brokers who are members of the NACFB, because those are the ones who have signed up to a code of conduct. The brokers in turn should only deal with the lender members of the ASTL, because my members have all signed up to a code of conduct as well. If you trade with people who are not members of their trade association, then there’s obviously a risk.”

 

Giving his reasons for why he believes that the number of fraudulent activities is on the rise, Mr Bloomfield said: “When you have the shortages and the distortions in the market such as we have today and you have a demand that’s not being supplied, it does leave temptation open to people who are exceedingly keen to get credit being prepared to take more of a risk to get that credit today than they would have been a few years ago. Naturally, our recommendation would be for everyone to be sensible and cautious. Find out who you’re dealing with and only deal with members of trade associations.”

 

However, Mr Bloomfield also stated that borrowers and brokers are not the only victims of fraud: “Fraud is perpetrated on lenders too. It comes from a variety of sources; it could be a dishonest property developer, a broker, a valuer or a solicitor. The most successful cases of fraud against lenders, including short term lenders, are the ones that are coordinated by a small ring. What we at the ASTL are trying to do through the trade association, on behalf of the members, is make access easier to data about fraudsters, whether they’ve been convicted or merely suspected.”

 

This idea about providing access to a fraud database is not easy, as Mr Bloomfield admits: “The reason we don’t do this today is that it is too expensive. Technically it is possible. But the trouble is, if you take the fraud prevention measures that apply to the residential mortgages, you have a very high volume of residential mortgages being applied for, and that allows it to be affordable. With our lender members, you have a relatively small number of lenders and applications, so the cost of checking each one through the reference agencies is not cheap. We’re trying to find a viable and acceptable level of cost before we put all this in place. More meetings are going on, more testing, more work; it’s a very active project by the trade association on behalf of its members.”

 

Mr Bloomfield also mentioned that although only a small proportion of the short term lending industry is FSA regulated (he estimates it to be around 5%) there has been increasing interest from the FSA in becoming more involved with the bridging loan sector.

 

“We have been notified by the FSA that they are interested in the activities of short term lenders and a meeting has been arranged with them about the matter of treating customers fairly and also to see if there are any recommendations, regulations or requirements that they’re going to impose. That is where we are at the moment.” Mr Bloomfield concluded.  

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