fraud – intentional deception to secure unfair or unlawful gain (Wikipedia)

On March 12th 2020, we first approached RICS and MHCLG with our concerns over the EWS1 process being a ‘magnet for fraud’ within the Building Safety Crisis.

I recently got the opportunity to talk with Matt Hodges-Long, Founder of the Building Safety Register about his work to identify and expose EWS1 Fraud.

The EWS1 process (designed by the Royal Institution of Chartered Surveyors) requires a suitably qualified and competent person to sign off on the fire safety of the external wall system of residential buildings. 

To produce a reliable and safe EWS1 grading the surveyor will need to gain a thorough understanding of the materials used and the quality of the construction. Residents, Lenders, Building Managers, Fire Service and others will then make potentially life-changing decisions based on this grading and the underlying survey report used to produce it.

While EWS1 was originally intended for buildings over 18m or lower heights where ‘specific concerns exist’ lenders are now asking for an EWS1 survey for purpose-built flats of all heights. 

This move to EWS1 as a default position has created an impossible demand due to the scarcity of competent surveyors. Dozens of new incompetent or fraudulent companies have been attracted to the EWS1 opportunity.

Why we became so concerned about EWS1 fraud back in March 2020

We started receiving questions from residents about the quality of their EWS1 reports and forms back in February 2020. Simple questions at first along the lines of:

“We’ve received a copy of this report from our Managing Agent, could you take a quick look at it and let me know if you agree with the conclusions.”

“I’m not technical but this report is full of spelling mistakes and doesn’t seem to be very well written, what are your thoughts?”

The more we looked into it the more concerned we became in terms of the potential for fraud. So we turned to one of the UK’s top fraud and financial crime experts, Neil Tyson who agreed with our analysis. 

Neil agreed with us that EWS1 was a ‘magnet for fraud’ and at that point, a chain of events started that has led to articles on the subject in Which?  BBC News and has even been raised by Neil McEvoy MS in the Welsh Parliament…

Why it is so easy to commit EWS1 fraud

Having established the financial motive to commit EWS1 fraud we need to look in more detail at why it is so easy. In short, the EWS1 process is poorly designed and exceptionally difficult to validate. Here are some of the key weaknesses:

EWS1 Availability

This form which is used by mortgage lenders as key evidence for lending decisions and managing agents to trigger the spend of millions of pounds of leaseholders money on repairs. It is a freely available to download from the RICS Website. 

EWS1 Registration

As a recipient of an EWS1 form, there is no registration mechanism to check against. To this date, and despite asking, nobody can confirm how many EWS1 forms have been produced, let alone who by.

EWS1 Signatory

Forms are designed for a ‘wet ink’ signature with no easy way to validate the qualifications or competence of the signatory or indeed if they did actually perform the work. EWS1 guidance notes contain ten ‘shoulds and coulds’ with only one MUST (see Note 3 below as an example). 

Note 3 – For Option B the signatory would need expertise in the assessment of the fire risk presented by external wall materials and should be a member of a relevant professional body that deals with fire safety in the built environment. This could be a Chartered Engineer with the Institution of Fire Engineers or equivalent.

EWS1 Process

There is no defined standard of how to perform an EWS1 survey to determine the ultimate grading for a building. The PAS9980 standard is being produced and we understand this could be available from July 2021. We have seen a wide variation of EWS1 survey reports ranging from amazingly detailed through to the absurd. In the absence of a defined EWS1 methodology, it is almost impossible for a survey recipient to objectively assess the quality of the work.

EWS1 Insurance

EWS1 forms are not insurance backed. There is no requirement on the form for the surveyor to disclose the details of their Professional Indemnity insurer. If recipients of the EWS1 make decisions based on fraudulent or incompetent EWS1 reports it is highly probable that insurers will not respond. Liability, in this case, may rest with the managing agent or fall back to leaseholders.

EWS1 Conflicts of Interest

No provisions exist within the EWS1 process to stop surveying firms benefiting from remediation work and interim measures identified in their EWS1 reports. A B2 grading on EWS1 will stop all mortgage lending and non-cash sales in their tracks. There is a high likelihood that building managers and leaseholders will want to appoint remediation companies quickly. Urgent or forced decision making is a perfect opportunity for fraudsters.

How to prevent EWS1 Fraud

This is a very difficult market to navigate made worse by the lending banks and retrospective Government guidance. Detailed due diligence should be carried out before appointment. Failure to do this could lead to serious consequences.

EWS1 can only be commissioned by the organisation with management responsibility for the property. However, residents should not be afraid to question their freeholder or managing agent about their process for appointing an EWS1 surveyor.

At a minimum, the organisation commissioning the EWS1 survey should take these steps before placing the order:

• Check the Professional Memberships and competence credentials of the survey firm and the surveyor
• Review the proposed EWS1 survey methodology 
• Ask to see a copy of the surveyor’s Professional Indemnity Insurance. Validate that it is genuine and covers the EWS1 work
• Review a sample of their previous EWS1 Survey Reports
• Check the legal entity on Companies House and be especially cautious about companies that have been incorporated recently or have ownership links to remediation or waking watch companies
• Speak to references about their experience
• Be wary of survey firms with immediate availability, or pricing that doesn’t marry up with your expectation of days effort x reasonable day rate

Remember to retain comprehensive records of the due diligence process

How to spot EWS1 Fraud

There are many hallmarks of a fraudulent EWS1 form and survey. Here are some of the key things to look for. These checks need to take place before the invoice is paid for the EWS1 survey:

• Missing survey report – the only way to properly assess a building is to perform an investigation. Even if your building is graded A1, there should be supporting evidence that led the surveyor to this conclusion. If the EWS1 grade is B2 the survey report must include both the remedial and interim measures required 
• Poor quality survey report – if it’s lightweight, full of typos, grammatical and factual errors, then it’s most likely fraudulent
• Multiple ratings – some EWS1 forms grade the same building both A1 and B2. There should only be one Grade. So, if one face of the building is B2 then the building should be graded B2. The detailed report should then explain the grading relates to one face
• Check the signatory against their professional register – don’t be afraid to call RICS, IFE, CIOB etc to validate. Also, call the signatory and ask them if they performed the work if concerned
• Peer review – don’t be afraid to commission an unrelated 3rd party to review the survey report and EWS1 grading

What to do if you suspect EWS1 Fraud

If you suspect your EWS1 survey to be fraudulent you should immediately raise your concerns formally. Also, report your concerns to ActionFraud and ask for a crime number.