Motor finance fraud in 2027: how data will help lenders act earlier

3-minute read time

Motor finance lenders are under pressure to make faster decisions while fraud risk extends significantly further across identities, risk surfaces and the wider customer relationship.

Following the FLA Fraud & Financial Crime Summit, we spoke to Maxwell Hughes, our finance commercial development expert, about how continuous, connected, cross-sector intelligence can help manage that challenge.

Q: The summit was packed with insight. What stood out for you most?

Maxwell: The interest in connected intelligence. Specifically, its role in helping lenders act earlier – whether that’s against fraudsters, or to benefit good applicants.

Lenders increasingly tell me that finding out too late is putting pressure on both their teams and their bottom line. Late referrals, delayed approvals and lengthy investigations all stem from incomplete intelligence. And with ID fraud in motor finance surging by 250% last year, lenders are understandably worried about how long current fraud strategies can be sustained.

But for a sector focused on growth, applying the emergency brake isn’t an option. This is exactly why Synectics’ connected intelligence findings resonate so much across the industry.

22% of fraudsters organisations encounter are already known to a financial services peer, and 44% of the most serious fraud leaves identifiable warning signs months before any application is made.

There’s a practical opportunity here to bring that connected intelligence from other organisations and sectors into lending decisions. With fuller context, a confident decision can be expedited. For high-value or risk lends, the same intelligence sources can be continuously checked for changes once a loan has been approved.

Q: So, warning signs exist. Why do you think they’re being missed?

Maxwell: Put frankly, because many controls in this space still assess risk using a point-in-time snapshot of the information presented in an application. That can leave out warning signs already visible elsewhere, as well as changes that emerge after approval.

Organised fraud increasingly exploits vulnerability through a highly methodical approach to third-party fraud. False identities are obtained – via victim compromise or synthetic ID creation – then built up over many months through interactions with multiple organisations, products and sectors.

By the time a “ramped” ID reaches its target – a high-value motor finance application – it can look credible to an isolated check.

Q: It feels like there’s a significant opportunity to prevent bad lends – both before and after approval?

Maxwell: Yes, absolutely. Synthetic IDs are a clear example. Today, one in three synthetics are reused. That’s 40% more than the year prior, suggesting fabricated IDs are becoming more effective at passing controls.

But adding friction or more investigators need not be the answer. Connected intelligence – shared across time, sectors and the different risk surfaces involved in a lend – can help protect the genuine applicant while creating a greater obstacle for the fraudster. We recommend leveraging it at quote through to approval and default monitoring.

Q: This said, what should motor finance firms prioritise in the next 12 months?

Maxwell: I’d focus on three areas. First, risk beyond your borders. Organised crime does not conform to product, sector or organisational boundaries. Firms need to look further afield for risk signals that may already have surfaced elsewhere.

Second, risk over time. Firms that remain reliant on point-in-time checks and reactive rescreens will face growing exposure. The direction of travel has to be towards a more automated lifecycle view of applicants, customers and entities.

And third, risk in surprising places. Fraud finds the unguarded route, so firms need a more networked view of the entities, channels, assets and behaviours that sit around the applicant.

Taken together, it’s a shift from asking whether an application appears low risk in isolation to challenging whether the wider journey makes sense, raises suspicion or shows signs of taking a high-risk turn.