A former manager at the FSA enforcement division has warned that the growing number of mortgage fraud cases will be in danger of falling into a legal black hole.
The current economic downturn has sparked an increase in fraudulent activity, with the FSA taking action against 20 mortgage brokers last year. However Steven Francis, who is now a partner at law firm Reynolds Porter Chamberlain LLP, has warned that police do not have the proper resources to deal with mortgage fraud.
The FSA can only ban or fine mortgage fraudsters, with harsher action beyond its remit.
Mr Francis, explaining the current problems, said: “The fear is that mortgage fraud goes into a 'black hole', because it is not big enough to be a serious fraud and engage the Serious Fraud Office.”
He went on to say: “In the 1980s, you had police officers who were very excited about doing fraud cases and fraud was a new growing area that police officers could get into. Criminal action is not the FSA's remit, and police officers are tied up at the moment with terrorism and problems with youth crime, not fraud.”
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