I am publishing a case-study of the experiences of a lady who has become a regular correspondent with me. Her story is a scandal, a modern morality tale of our times. She deserves so much better but she is being let down by every agency set up to deal with financial misfeasance. It is cases like this that diminish us, and bring the agencies of control into disrepute. But first, I will let her recap.....
“...In March 2006, having discussed our financial circumstances with **** Financial Management Ltd, my husband was told by their mortgage advisor ****** ****** our monthly outgoings could be dramatically reduced if we agreed to switch our existing £725,000 mortgage with TMB to an interest only discounted mortgage with the Bank of Scotland and restructure our short term borrowings.
He advised us to increase the debt secured against our home by firstly taking a further £65,000 by way of a Bank of Scotland further advance, secondly by making use of a £40,000 draw down which, underwritten at outset, would be made available to us after three months of regular monthly interest payments and thirdly by taking a three month payment holiday for which we would also be eligible after making three monthly interest payments.
His recommendation was to use all the additional funds raised against the remaining equity in our home to repay credit cards Keen to alleviate his cash flow problems at a time when the terminal illness of two of his closest relatives (his mother and brother) was making it impossible to divide his time effectively between the needs of his family and the demands of his business, my husband agreed.
- After a financial fact finding telephone conversation with my husband, the mortgage application (which we never saw) was submitted online by the broker whom we never met using false information which was tailored to fit the Bank of Scotland’s underwriting requirements. We did not supply the information the broker wrote on the application form .There were no acquisition costs to pay, neither were there solicitors or surveyors to instruct as the cost of the valuation and the conveyance, along with instructions, were either taken care of by the lender or added to the advance.
- On 30 March 2006, after being told by the broker verbally (again by telephone) we had received a mortgage offer for £790,000 from the Bank of Scotland as a result of his submitting our application on line we were sent, and duly signed, the declaration page and the direct debit mandate of an otherwise blank application form. There then followed another declaration sheet, once again without a completed application form, approximately two weeks later
As a result of his efforts, the broker earned almost £4000 and we, unwittingly, agreed to move from a very tight corner which could have been rectified by the sale of our house, to an impossible situation amounting to tens of thousands of pounds in arrears; a £217,000 mortgage shortfall which occurred from the forced sale of our home in 2009 and six long years of battling with an unsympathetic bank while trying to establish precisely what happened to put us in such a position.
Had HBOS not inadvertently sent me a copy of our original application form (minus the declaration pages) by way of an explanation to some wildly inaccurate claims they were making about the original purchase price and original purchase date of our house in response to my over valuation complaint to them, I might never have discovered the fraudulent nature of the information the application form contained.
This evidence first came to light in January 2013 and, as a result of a complaint I then made to the Financial Ombudsman Service about overvaluation, irresponsible lending and the falsified information on our mortgage application, I was told (in January 2014 after a full FOS investigation had been completed) my case should have cited the mortgage broker and not HBOS. Needless to say the FOS were unable to uphold my complaint as it was deemed HBOS were faultless because they were not the appointed advisors for the mortgage sale.
The application form which ************ completed states that the mortgage product applied for was a sale he “advised” as a representative of **** Financial Management Ltd. It also states our accounts were available and the mortgage was not self certified. It goes on to claim the following;
- ************** had face to face contact with both my husband and I during the application process. This is completely untrue. We have never, on any occasion, met ************ and all communications between my husband and ************ were via telephone, email, fax or post. I have had no face to face or telephone contact with ************.
- Both ************and **** Financial Management claim they saw our original passports for money laundering purposes. This is completely untrue. We were merely asked to send photocopies of our passports and a council tax bill both of which have been signed off by **** Financial Management in handwriting which does not appear to be ************'s.
- Our earned income is shown on the application form as approximately 249k plus 75k with a further 50k in rental income for the years 2005, 2004 and 2003. Our actual income, as illustrated by our company accounts and Inland Revenue supplied tax returns, amounted to little more than 50k per annum in total for the years stated.
- The purchase price and purchase date of the property is shown as £890,000 in 2004 when in fact it was purchased in 2000 for £250,000.
- The age of the property is shown as 20 years old when in fact it could be as much as 300 years old or more and part of the property is thought to have been recorded in the Doomsday Book.
- The application states the property has five bedrooms and three living rooms when it actually has four bed rooms and two living rooms
When I reported the details of this fraud to the Bank of Scotland, I was advised never to contact them again. Next I reported the matter to the FCA who were insistent that what had happened appeared to be fraud and therefore beyond the remit of both themselves and the FOS. The FCA advised me to contact the police. This I have done and my case details have been logged and given a crime reference number. The Devon and Cornwall Police advised me to seek legal advice.
Having initially spoken to the Avon and Somerset Police Serious Fraud Office in August 2014 to inquire as to whom I should report this financial crime, I was told the Bristol police had uncovered a similar mortgage broker fraud amounting to 11 million pounds. This week Swinton Insurance Brokers directors were fined £900,000 by the FCA for creating an over incentivised culture which promoted miss selling and wrongdoing. It is estimated they will be required to pay 11 million pounds in customer compensation.
I strongly suspect the same unscrupulous methods have been equally lucrative for **** Financial Management Ltd but to date I have been unable to get to the bottom of why they were removed from HBOS’ lending panel during my applications processing. Nor have I been able find out if they have been the subject of other similar complaints or any formal regulatory disciplinary action. So far, I have requested this information from HBOS, ****, the FCA and Openwork broker network support. My requests have either been ignored or denied.
In the meantime I have, on the instructions of the police, informed the Bank of Scotland (formerly HBOS) that they have been a victim of fraud and asked them to file a police report too.
I have received no letter of acknowledgement or response.
Had ************ of **** Financial Management not falsified our mortgage application to secure us an unsuitable and unaffordable mortgage against our home, we would have had no alternative but to sell it for the £925,000 value the Bank of Scotland surveyor gave it at the time. A valuation which both the Bank of Scotland and the Financial Ombudsman have both later endorsed as fair and accurate in my FOS complaint of 2013...”
What is very clear in this case is that my correspondent has been seriously financially damaged by the unlawful actions of the financial intermediary.
She has been placed in an invidious position as the result of a mortgage she never applied for, and was submitted without her knowledge or approval.
There is no doubt that the fraudulent application was an example of a criminal offence under both the Fraud Act and under Section 17 of the Theft Act 1968. In addition there is evidence of an offence of forgery and of uttering a forged document, all of which have benefited the intermediary.
She has sought appropriate help from every agency capable of assisting her and she has been turned away at every turn. This is happening in a country which is supposed to be planted wall to wall with laws designed to defeat such fraudsters, and yet no-one will get off their ‘delicate positions’ to help her.
In desperation, she asked my advice about applying to the police, and it was I who referred her to the detectives in her home area of Avon and Somerset. Those officers gave her positive assistance and confirmed that they were working on a similar case example. However, for technical reasons, the offence appeared to have been committed in Devon and Cornwall, and she was referred to the police there.
Greatly encouraged by the communication from Avon and Somerset, she contacted another agency, Action Fraud. She says;
“...When I initially spoke to the Bristol contact you found me (through your contact on the Economic Crime Team) D. Sgt.***** of the Avon and Somerset Police, he told me he was investigating a very similar broker fraud in Bristol amounting to 11 million pounds and counting. He spoke with great of enthusiasm for the uncovering of this type of crime so I was very much encouraged. As my case fell out of his jurisdiction (because my mortgage broker committed the offence in Cornwall) he said I should contact Action Fraud so an officer from the Devon and Cornwall police could be assigned to my case. Action Fraud were very careful to record every detail of my allegations and concluded what had happened ticked every box for financial fraud so I remained really hopeful there would be a criminal investigation.
What happened next is almost beyond belief. I recently asked her what was the state of her complaint and she sent me the following email.
“...Without them even looking at the evidence I was told by Devon and Cornwall Police that this kind of fraud it is likely to be too complicated for a court to understand and therefore too difficult for them, with their limited resources, to secure a prosecution. They advised me to seek legal advice before supplying them with any more evidence because they will most likely view my husband and I as prime suspects in the fraud as, in their opinion, we had the most to gain from the falsified application. They also said that even if I can successfully prove I have been a victim of broker fraud, it is primarily a civil matter and not usually a matter the police would deal with. They agreed to reopen the case if I can get a statement from the Bank of Scotland saying they were a victim of this broker fraud too. Needless to say I have been unsuccessful in this regard...”
Subsequently upon querying this attitude, she states;
“...However, after three separate telephone conversations with two different Devon and Cornwall officers it became evident that their mission was not to collect evidence to support my allegations of broker fraud to support an investigation but instead they were very persuasive in their discouragement of my taking things any further. I remember saying, "Surely it isn't acceptable for a mortgage broker to put false information on a mortgage application so he can receive £4,500 in fees," but was told it was going to be just too difficult prove. I even mentioned DS ***** and his ongoing broker fraud case in Bristol but this was only met with further disinterest...”
I am still in a state of shock that this should have been the advice from a major police force in this country, and one from whom I once sought help and assistance in investigating a major complicated fraud, help which was immediately and unstintingly forthcoming from a very overworked team of detectives, who nevertheless went out of their way to help a brother detective officer.
I replied to my friend thus.
“...I have never, ever heard such utter bollocks (that's a technical expression)!
This confirms what I have always feared which is that the police in this country have just walked away from their primary responsibilities towards the populace.
First of all, the question of whether this is a case which a jury would understand is none of their concern. It is a matter, if at all, for the Crown Prosecution Service to make that call, not Devon and Cornwall Police.
Secondly, the suggestion that you and your husband were primary beneficiaries is completely false. You can demonstrate that you did not know what information had been supplied and you did not sign the forms so how do they make this assumption.
Thrdly, it is not primarily a civil matter, it is an allegation of fraud, false accounting and one or two other offences.
They know full well that BoS are not going to give that statement, but in any event, it should be their responsibility to ascertain the BoS attitude.
This is a most awful example of police laziness. They just don't want to spend the money from their limited budgets to follow up these kind of crimes. They should still be utterly ashamed of themselves, I have never heard such utter craven excuses...”
This kind of result following an allegation of fraud is unconscionable. Before D&C could even consider the case, it had to go through review at Action Fraud, who clearly thought it was suitable for investigation, otherwise they would not have referred it to them.
I am wholly staggered that this kind of insouciance should have been demonstrated towards this woman. She has minutely documented her ordeal, complete with full exhibits and records, yet the police were not willing to even begin to make some basic enquiries.
What has happened to the state of affairs in this country that anyone in the financial services industry can seemingly commit alleged crimes with impunity and the police will not even bother to make the simplest investigation?
I have known for years that it was useless to ask for help from the FCA, or the Financial Ombudsman’s Service, who are both too busy protecting the interests of their constituents, but I would have hoped that at least the cops would have seen the injustice of this case and would have made an effort to get involved.
This case and the attitude of the Devon and Cornwall cops has deeply saddened me. There was a time when Devon and Cornwall was a force which stood out in its willingness to think out of the box and adopt new and sometimes untried tactics. It seems those days are long gone.