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Driving a culture of fraud prevention across the whole public sector

Source: Public Sector Executive May/June 12

Government needs to take lessons from the private sector and look beyond big wins to tackle fraud effectively, argues CIFAS chief executive Peter Hurst.

Much of the Government’s work on fraud, error and debt is coming to fruition this year. It’s important work – perhaps not the most exciting item on the Government’s agenda but nonetheless crucial to making the public sector’s work more efficient: changing the way they deal with financial transactions, and helping to cut down the £20bn+ lost to fraud each year.

£20bn could be used for a number of worthy purposes. But this is about more than money. It’s about stopping fraudsters – criminals – from attacking government and its agencies, and making sure that support reaches the people who deserve it.

On top of the £20.3bn of public sector fraud, £45.5bn is estimated to be lost in the private sector, £6.1bn to individuals, and £1.1bn to charities and the not-for-profit sector. These losses mean higher costs for everyone and money diverted away not only from the economy but also from worthy causes.

Too often, when employers discover a fraudster in their midst, they cease employment and get them out of the building as quickly as possible. Unless successfully prosecuted, these fraudsters are free to move – undetected – to a new employer and begin the same activities again.

Similarly, fraudsters identified as attempting to claim benefits, tax credits, NHS medical treatment or any service to which they have no entitlement have freedom to try again with another as the crucial information identifying them as fraudsters is not routinely shared across both the public and private sectors.

In practice this can mean one public sector employer hiring staff who have been fired for defrauding another elsewhere in the country, or Government paying a benefit to someone known by another public body as having tried to access services with false identity documents – the list can, and does, go on and on.

So it is welcome news that the Fraud, Error and Debt Taskforce has accepted that data-sharing is key to stopping fraudsters in their tracks. When a fraudster is identified by one public body, that information should be available to protect other bodies from similar attacks. Fraudsters aren’t picky as to who or what they attack – be it the public or private sectors, or even individuals. A proportionate and workable response needs to reflect that we are all in this together.

As part of their strategy, ministers need to look beyond the ‘big win’ departments. They must drive a culture of fraud prevention across the whole public sector. DWP and HMRC will no doubt reap significant benefits from the identification of fraud but for other departments and agencies the financial benefits may be less clear.

The Identity and Passport Service and the DVLA, for example, will likely see little in the way of financial benefits when implementing fraud data-sharing strategies. But the counterfraud community knows that false and fraudulently obtained identity documents are key drivers of fraud.

Government must make sure that its strategy looks beyond immediate financial returns and accept that some bodies will have to act as ‘loss leaders’ as part of a bigger battle. That’s a bold direction to take in these straitened times, but it is the right one.

Data-sharing is the approach that was pioneered by CIFAS over 20 years ago and which continues to deliver significant savings for our members across all sectors. It must be at the heart of any fraud prevention strategy and we are pleased that the Government is planning to adopt best practice in this regard.

However, limited data sharing about frauds will only get Government so far – to fight fraud and fraudsters effectively, fraud data MUST be shared between the public, private and third sectors for the benefit of all.

Fraudsters attack every sector. To fight back effectively, all sectors must stand together.

CIFAS is a not-for-profit membership association representing both the public and private sectors and is dedicated to the prevention of fraud and the identification of financial and related crime.

Peter Hurst has been its chief executive since 1999, and was formerly head of fraud prevention at Barclays Bank.

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