Rate of mortgage and insurance cases increase

The amount of fraud on mortgages and insurance policies has more than doubled since the start of the recession, and the ongoing pressure on household finances is expected to lead to more cases, a credit agency has said.

The statistics from Experian indicate that although the total rate of fraud on financial products has declined since 2007, in particular areas there have been large rises in the number of false applications.

The stats show that the speed of mortgage fraud rose to 38 cases every 10,000 applications in 2012, up from 35 the prior year, and more than double the 18 cases per 10,000 in 2007.

Nine out of ten cases entailed individuals painting a intentionally false picture of their personal circumstances on an application, with the most common action being an attempt to hide a poor credit history. False statements about the applicant’s employment status or financial circumstances also made an appearance.

Experian said mortgage fraud cases were highest among the social group made up of middle-aged, middle-class, and skilled working-class individuals.

Over the same period of time the number of fraud cases including insurance policies have also risen more than double, from 5.44 in every 10,000 cases in 2007 to 12 in every 10,000 in 2012. In this area, 86% of frauds involved the person applying for the policy or making a claim.

Across the board, Experian said the group responsible for the majority of fraudulent applications for financial products in 2012 was a group they categorise as “Terraced melting pot”. This group, which portrays people in routine urban occupations, was responsible for 21% of first-party fraud cases over the year.

The “Liberal opinion” group, consists of young professionals and well-educated people, followed accounting for 14% of first party cases. Amounting to about 70% of financial services applications fraud was carried out by first parties falsifying their circumstances.

Experian said they predicted fraudulent applications to carry on increasing throughout 2013, pushed by the continuing pressure on household income and benefits, and stricter credit and lending rules.

Nick Mothershaw, UK director of identity and fraud at Experian said, "As a result of poor or patchy credit, more and more 'non-professional' fraudsters are clearly attempting to ease their position, misrepresent applications or make exaggerated claims over their income and personal finances."

"Mortgages, current accounts, insurance and cards will continue to come under pressure from fraudsters keen to get their hands on cash facilities."

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