The level of fraudulent applications received by financial services firms has risen dramatically over the first half of 2010, according to a new report. Research by the credit reference agency Experian has found that fraudulent credit applications have increased by a third during the first half of the year, with car finance fraud showing the biggest rise.

The study revealed that about 19 in every 10,000 applications for credit or other financial services was fraudulent over that time period, 33 per cent higher than that for the second half of 2009. In particular, fraudulent applications for car finance surging by 35 per cent to its highest level since for four years, with Experian finding that 34 out of every 10,000 applications for motor finance were fraudulent over the six months to the end of this June. Most of the attempted car finance fraud involved the concealment of adverse credit histories .

Much of this rise can be explained by people lying on their application forms in an attempt to bypass the strict lending criteria that banks and building societies have now put in place.

Nick Mothershaw, director of fraud and identity solutions at Experian, commented Fraud within the UK's automotive sector is rapidly increasing. The growth in this area can be partly explained by the high value assets on offer that can easily be converted into cash, but the complexity of the sales process is also a factor. For fraudsters, this makes it a comparatively easier target than other finance providers .