FRAUD
W Dealing with deception
ith local
government facing a period
of austerity, there is a renewed drive to reduce the amount of money which is being fraudulently claimed.
The National Fraud Initiative which was carried out under the umbrella of the Audit Commission in its report Protecting the Public Purse highlighted three particular frauds experienced by local authorities that ‘require more attention’.
“These include things like housing tenancy fraud, where applicants for social housing submit false applications, or where a legitimate tenant has been succeeded by someone who isn’t eligible, or where social housing is sub-let for profit,” explains Kate Beddington-Brown who is head of communications
at.CIFAS, the fraud prevention service.
“The second is the council tax single person discount. This is where individuals claim the 25 per cent single person discount fraudulently (from their council tax bill). The National Fraud Initiative estimates the cost of those claiming the discount fraudulently (and undetected) to be as much as £90 million a year.
“The third is recruitment fraud. With the size of the full-time workforce, and the additional complexities caused by the number of temporary staff required, local authorities face real difficulties in ensuring that the staff they recruit are honest (without a criminal record), and properly qualified to do the work that they have been employed to do.
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“Other types of fraud include housing and council tax benefit fraud (estimated to cost local authorities £200 million a year), procurement fraud, fraudulent claims for social care direct payments, blue badge parking fraud, bogus insurance fraud (tripping on pavements, potholes in roads, that kind of thing) and abuse of position (someone receiving money diverting funds to the wrong bank account for profit).”
Although fraud is a major problem for local authorities, there is already considerable work under way both to discourage those considering fraudulent actions and to catch them once the crime has been committed.
“Most local authorities already do a great deal themselves, employing teams of investigators and initiating prosecutions where possible. They participate in new and established networks to fight fraud. They participate in the National Fraud Initiative, which is carried out every 2 years.
“It has done a great deal to identify frauds that have been committed during the 2-year period and since 1996 has uncovered over £500 million lost to fraud and overpayments. The process also includes action towards recovering those funds from the fraudsters. All of this, though, is “after the event”.
“Prevention would clearly be preferable as it would prevent the funds being lost in the first place. Solutions already exist, but this depends on the authority’s appetite and funding regime. One solution is the legal sharing of data through a Specified Anti-Fraud
Organisation as designated by the Home Office under the Serious Crime Act 2007. CIFAS is one such SAFO.”
So as a SAFO, how is CIFAS helping the public sector to protect itself against fraud?
“By sharing fraud data through the CIFAS database, its 260 member organisations reported that they prevented fraud losses of £857 million in 2009. The database is available 24 hours a day, 7 days a week, 365 days a year in real time for members to prevent fraud - and it works in a different way from the NFI. It prevents fraud before it occurs. And, so far as the public sector is concerned, not only could local authorities benefit from membership, but also central government departments and agencies. At present, all CIFAS members are from the private sector, although a number of public sector organisations are preparing to join.
“Indeed, the UK Border Agency’s minister has already announced their intention to do so and active discussions with a number of local authorities are also under way. It is known that fraudsters do not discriminate – research undertaken with the Home Office has shown that the same fraudsters who attack the private sector also attack the public sector, so the same protection is required.
“Local authorities could use a SAFO like CIFAS to prevent financial losses through fraud in a number of ways. By sharing data through CIFAS on the frauds they detect, they could share fraud data reciprocally both with other local authorities and with the private sector to prevent fraud.
As local authorities battle to reduce wasteful spending, one area which has come under scrutiny is the amount spent combating fraud, reports Richard Mackillican
“They could, for example, search the database to verify applications for housing benefit, council tax benefit, council tax single person discounts, etc. In doing so, they might find that an application for housing benefit was being made by someone using a false identity, or that in a previous application for a loan (from another CIFAS member organisation), the individual had quoted a much higher income, thus alerting the authority to the likelihood of fraud.
“If any of the addresses provided by an applicant were linked to a fraud on the database, for example, a local authority could look more closely at the details, enabling their officers after a full investigation, to determine whether the application was genuine and valid, or fraudulent.
“This would help them to ensure that benefits reach those in real need, and not criminals and opportunists. It would not jeopardise the delivery of benefits and services to legitimate claimants.
“CIFAS services are available to local authorities either through mainstream credit reference or other agencies such as Callcredit, Equifax, Experian or Synectics Solutions or direct from CIFAS using secure data links.
“CIFAS also has a staff fraud database that helps to prevent staff fraudsters from moving unchallenged to unsuspecting employers, and this was established in consultation with the Office of the Information Commissioner, the CBI, the TUC and others. CIFAS can provide further information about this if you are interested.”
Sep/Oct 10
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