Mortgage Fraud Prevention - the role of the lender panel manager Nick Larkins Mortgage Fraud Controls Manager Lloyds Banking Group September 2013

2 Whos who Some facts about Lloyds conveyancing panel Panel management framework How mortgage fraud has changed over the past few years Risks today / Risks tomorrow Summary and questions Purpose of todays presentation

3 Whos who! £2bn

4 Whos who! Perimeter Controls Application Screening Detection Continuous Improvement

5 Lloyds panel Large panel across the UK Stable member numbers for over 12 months Open to new members No restrictions on firm size No intention to reduce panel outside of policy requirements Active panel management programme

6 Role of the Panel Manager in Lloyds Compliance with bank policy and regulatory requirements Ongoing due diligence of panel members Panel application management Minimise fraud loss Customer protection Support smooth customer journey

7 Panel management challenges

8 Challenging the laws of physics Misappropriation of funds False Certificates of Title Charge registration - failure to register - defective registration - Leasehold conversion Property hi-jack (negligence or complicity) Vendor Solicitor Fraud Transparency -Distressed sale -Hidden representation -Deposit manipulation -Scheme Abuse

9 Example Below Market Value transaction

10 The good news – together we are making progress ThenNow ……….based on levels of detected fraud requiring a fraud provision

11 There are risks facing us…………… Market upturn Financial health of firms Customer finances Pressure on police resources Increasingly complex nature of fraud Awareness is rising Industry solution Supplier market has reacted Level of investment has increased CML Handbook Part 3 however

12 Compliance with the CML Handbook Timely registration of charge Notify the lender of changes to the firm Notify the lender of any suspicions on a case Confirm probity of the vendor solicitor Carefully vet new employees Controls over staff, client account, transparency Your panel membership Compliance with the CML Handbook Build on solid foundations

13 In summary………. Good progress in recent years Market conditions are changing the risk profile BMV, hidden deposits, vendor solicitor fraud A need to continue to focus on the foundations Communication with the lender is vital Expect continued assurance activity by lenders

14 QUESTIONS? Lloyds Banking Group – Panel Management Team