The Financial Services Authority (FSA) is worried about the fraudulent use of buy-to-let mortgages by some people who cannot obtain an ordinary residential mortgage. The regulator says people may be doing this to avoid recent restrictions on risky mortgage lending.
The warning comes in the FSA's second annual review of the risks to customers of the financial services industry.
Many have already been identified, such as the mis-selling of PPI insurance.

Growing problem? The FSA said that the fraudulent use of buy-to-let mortgages could increase. "We are seeing anecdotal evidence of unregulated buy-to-let mortgages being used fraudulently as a replacement for regulated residential mortgage contracts, as borrowers and intermediaries seek to circumvent more stringent income and affordability checks," the FSA said. The regulator pointed out that this problem might grow because some potential borrowers had been shut out by the much greater restrictions now in place on risky mortgage lending....Read more here--: BBC News - FSA warns on new buy-to-let fraud