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Received notification of vehicle change of ownership from DVLA - is this a fraud attempt?

A friend of mine recently received a letter from the DVLA saying that they had received a registration for a change of ownership of the vehicle he is still owning and driving. They asked him to contact them, which he did, informing them he still owned and was driving that vehicle and had not sold or had it stolen. They have now put a hold on the transfer and he has been informed they will send a letter asking for proof of ownership and to send photos of the car, reg and chassis number. Will he have to notify the police that there seems to be some attempt of fraud or will the DVLA automatically do this? Any idea how this could happen?

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The DVLA does not yet know who is telling the truth so is asking for the relevant evidence before it takes things any further. Probably worth reporting to the police, but they might not do anything immediately. Basically, someone is trying to steal keepership of the car, probably to try to obtain a chattel mortgage (logbook loan) on it.
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