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Brokers have been urged to protect themselves against the rise in credit fraud by improving their office processes.
Veda will be discussing financial services fraud today at a Sydney conference alongside the major banks, international financial institutions, law enforcement officials and anti-fraud experts.
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The firm's general manager of fraud and identity solutions, Imelda Newton, told The Adviser that credit fraud has reached its highest level since 2009 as mortgage volumes have grown.
"We saw a close correlation to the amount of credit activity post-GFC. Where there's money, there's fraud, hence the increase in fraud," she said.
Ms Newton said brokers need to be very careful about confirming a borrower's identity because criminals are now using stolen identities rather than fictitious identities.
"Brokers should be looking to use electronic identity verification – why they'd want to use that is so they can apply consistent rules and processes that aren't subjective, so they haven't got one of their staff having to make a decision on the fly," she said.
"Also, it leaves a nice audit trail of everything that has been undertaken with that identity check so that should the worst happen, at least they can prove they took every reasonable step possible to check a person's identity."
Ms Newton said brokers also suffer when one of their clients defrauds a lender.
"Ultimately, it's the lender who will lose financially, but if it's been proven that the broker has been involved, the reputational risk [for] that broker business can be substantial," she said.
"While the initial transaction might not result in a financial loss to them, it exposes them to the risk of losing income further down the track."
Ms Newton told The Adviser that brokers, lenders and consumers all have a responsibility to prevent credit fraud.
She said brokers should advise their clients to put an alert on their credit file, so those clients will be notified the moment credit is taken out in their name.
Two lenders told The Adviser in August that although brokers have a role to play in combating fraud, banks must bear the ultimate responsibility.
Teachers Mutual Bank said it puts a significant amount of time into educating loan officers about potential risks.
Australian First Mortgage said its credit managers are trained to be extra diligent in determining the bona fides of every applicant on every deal that is submitted.
[Related: 'High-risk' credit applications rise 52pc in two years]
