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"...it is important to remember that so far, fraud has proved impossible to eliminate. The game in town is actually fraud deflection: making ourselves more difficult for fraudsters than our competitors."
Graham Lloyd, expert in Financial services,  PA Consulting Group

How can increase in UK financial services fraud be tackled?

The British Insurance Brokers' Association (Biba) has noted that financial services fraud tends to increase in times of economic downturn–and suggested ways this type of criminality can be tackled.

Technical services manager Steve Foulsham said there needs to be better communication between brokers and insurers.

He said many consumers see overinflated claims as a victimless crime, as they believe their cover provider is likely to lower the value of the claim.

Mr Foulsham said a "more joined-up approach" could be the key to tackling these types of criminals.

"If an insurer suspects fraud, the broker will know the client better because they are closer – and can disclose this to the insurer to make sure that the outcome is the right one," he remarked.

Recent National Fraud Authority figures revealed the crime costs the UK more than £30 billion per year, which is £17 billion higher than figures provided by the Association of Chief Police Officers (ACPO) report The Nature, Extent and Economic Impact of Fraud.

Some £1 billion in mortgage fraud has been recorded, while £2 billion is lost to insurance scams.

Much of the remainder is made up of plastic card, online banking and cheque problems.

PA's Graham Lloyd, expert in financial services commented: "In order to identify the mitigants, it is useful to examine the drivers of the increased fraud in current climate. Partly it's recession driven behaviours – my income no longer covers my outgoings, so I have to bridge or conceal the gap. By recognising impending gaps and offering say, repayment holidays or stretched terms, we may prevent it.  Partly it is about new opportunities – in the rush to attract and retain customers normal checks and controls may lapse. 

"It is also about our own role in enabling fraud. So long as we offer easily blurred or altered paper receipts and warranties instead of say, electronic lodgement, and offer (untraceable) cash refunds instead of say, a credit to a card, we are almost abetting.

"That said, it is important to remember that so far, fraud has proved impossible to eliminate. The key is actually fraud deflection: making ourselves more difficult for fraudsters than our competitors."

To find out more about Graham's expertise on tackling fraud in financial services, please contact us now.

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