Nationwide, the country's largest building society, has dropped Dunlop Haywards, the property agents, from its valuation panel in the latest repercussion of a suspected £10m fraud at the Cheshire Building Society.
The move came after the Serious Fraud Office said it was looking into a loan by
Ian McGarry, the City of
However, he has been suspended from his job, the group's
Nationwide said yesterday that it had been asked by the Financial Services Authority to "look at a number of transactions" in a sign that the investigation may be much wider than at first thought.
More than a dozen lenders have been approached by the City regulator to check certain loans on their books. It is thought that these may include Royal Bank of
"We are assisting the police and the SFO. Because of the nature of that we are unable to say any more at this present time," the FSA said. "But we have taken the precaution of removing Dunlop Haywards from our valuation panel as an interim measure."
West Bromwich Building Society has publicly stated that it has reviewed all loans where Dunlop Haywards had been involved. It, too, has dropped the group from its valuation panel.
Erinaceous has said it was too early to know if the alleged fraud was a one-off or not. The group's non-executive directors include Nigel Turnbull, author of the Turnbull report on risk management and internal controls, Lord Razzall of the Liberal Democrats, and Lord Poole, a former insurance executive and Tory adviser.
The group was forced to issue a stock exchange announcement last Tuesday night after a false rumour swept the City that the group's senior executives had been arrested.
The Cheshire Building Society had announced two weeks earlier that it would be pushed into a £1.3m net loss for 2005 as the result of a fraud. An initial investigation by
The FSA said it was working closely with the police and investigating authorities. "When we get information from them that suggests that another lender might want to check its files, looking at a particular transaction, we pass it on," it said.
It is understood that the investigation is very "targeted" on specific property deals.
The Building Societies Association said yesterday that there was "no risk to any institution" from the unfolding events.