The number of new investigations rose from 12 cases in 2013/14 to 16 this year, with the number of prosecutions "concluded or in progress" growing from 18 to 33.

David Green, Director of the Serious Fraud Office, said he had opened 16 new investigations in the year including Forex, Tesco, Barclays and Libor.

“Our conviction rate over the year was 78% by defendant, and 18 defendants in nine cases were successfully prosecuted,” said David.

“Reflecting our strategic focus, numbers may appear small, but the cases are very substantial.”

These statistics led B&C to ask those within the bridging industry to see what they thought of the rise in figures and how they were able to stop and prevent potential fraudulent cases.

Bob Sturges, Head of Communications at Omni Capital, said whilst they didn’t consider fraud in short term lending to be a widespread problem, it had potential to become so if they let their collective guard drop.

"There’s a misguided perception that bridging lenders are less vigilant than their mainstream counterparts,” said Bob.

“It probably dates from a time when it might have a the ring of truth about it.

“However, the fact it is no longer the case hasn’t put off some chancers who think the sector's still wide open to abuse.”

Bob believed the solution to fraud lay in ongoing vigilance and the judicious application of robust due diligence processes along with more effective cross-industry data sharing and co-operation.

“From a lender’s perspective, we have at our disposal a range of very effective anti-fraud tools, including money laundering and Know-Your-Customer checks,” added Bob.

“Often provided by external agencies – such as CIFAS, National Hunter and Veriphy – they provide a high level of confidence when assessing an applicant’s credentials.”

"It’s also vital to work with partners you know and trust - whether they be brokers, valuers or solicitors…the key defence is provided by clearly defined underwriting protocols underpinned by the skills and knowledge of well-trained personnel."

John Regan, Director of Platform Black, wasn’t surprised in the rise in general fraud figures but felt in alternative finance specifically he was concerned there were some parts of the sector exposed to risk.

“It’s a logical assumption that in a relatively new industry like alternative finance you are going to see people looking for weaknesses to exploit,” said John.

“There will of course be a bit of a lag before fraudulent activity starts to show, but also many businesses will be caught unaware, because they will grow and not experience any fraud, then all of a sudden it will hit them.”

John added that at Platform Black they carried out thorough checks which its funders felt confident in which was a win-win for everyone as it lowered pricing.

“We actively investigate all of the transactions on our platform, with a combination of site visits, invoice verification and checking that information we are given is genuine as best we can, rather than relying on credit agencies,” added John.

“Not every platform is as committed to this.” 

Ashley Ilsen, New Business Executive at Regentsmead, felt with the market growing so rapidly there was an inherent increase in opportunity for fraudsters.

“With Google, credit searches and other resources at our fingertips there’s no excuse for lenders not to go through a good level of due diligence and investigative work prior to taking on a new client,” explained Ashley.

“Fraudulent activity is arguably less likely to occur in development given how closely we monitor the progress and quality of building practices on site, however at Regentsmead we are always looking to tighten up our procedures and go into comprehensive detail on who we lend to.”

Rob Jupp, CEO of Brightstar, was another who felt the industry as a whole should recognise that it had a duty of care to ensure that the lenders do not lend on fraudulent cases.

"As a company, Brightstar has a person in charge of risk and we also speak to all the financial risk and compliance people at all the networks we work with," said Rob.

"There is not one month that goes by that we do not face a fraudulent attempt so our risk manager looks through all of the applications that come in.

"In addition we educate all of our staff on what to look for and regularly hold fraud prevention workshops."

Benson Hersch, CEO of the ASTL, felt fraud was a major concern for lenders and especially new entrants to the bridging finance sector.

“Lenders just coming into the market are particularly vulnerable because they don’t have the lines of communication that long standing lenders have; and are unlikely to be members of the ASTL, both of which provide invaluable support,” said Benson.

“This means that would-be fraudsters are more likely to target new, less well-known lenders that may not have the infrastructure in place to detect fraud.”

Benson explained that combatting fraud was a priority at the ASTL as they were like an umbrella organisation enabling members to join SIRA and check whenever they suspected someone of a fraudulent application.

“If someone suspects an applicant of fraud they can check on SIRA to see if any details match the database,” added Benson.  

“Fraud prevention will be highlighted at the ASTL's annual conference on 1st October at Painters' Hall," he concluded.