Do I think inflating your income on an application form to obtain a loan is fraud - yes, it's obtaining funds by deception and it could very well come back to haunt you. Do I think the directors of those companies will be pursued for fraud.... probably not aside from a few unlucky ones who are made examples of. Just because of the time and money it will take to go after the volume of everyone suspected. Self-cert is tricky, because people can plead ignorance if it's just a form filled in, it's harder to plead stupidity if they have doctored accounts or payslips for instance, it will depend on what they have done, who has filled the paperwork in, were there brokers involved, etc. What tends to happen is the client and broker point the fingers at each other and it muddies the water so much it becomes a difficult case to prosecute. If the government reneges on the deal, or their own balance sheet starts to wain, that's when the banks will investigate that as a way of getting some of this bad debt written off their books through their own insurance setups. They don't want to do that though, as their own premiums go up. Essentially monitoring fraud levels are important to banks, it's not for moral or societal reasons, it's because it's a default indicator. When fraud levels spike, default levels usually follow the same upward trajectory not long afterwards, so they can plan ahead on how to counter.
