Chair: Martin Gill

Mike Haley – Chief Executive Officer at Cifas
Dr David Shepherd – Senior Lecturer in Economic Crime at University of Portsmouth
Lee Fitzgerald – Director at Fraud Advisory Panel

Key points

Mike Haley traces the history of UK fraud reporting back to the Fraud Review in 2006 and notes how the combined recommendations of central reporting and an intelligence hub found expression in the formation of Action Fraud and the National Intelligence Reporting Centre, but he asks, what next? The central issue is the lack of attention paid to investigations and prosecutions; it is not more reports we need but more action. Making frauds compulsory is only realistic and fair if that report will lead to some positive action, often it won’t and yet have consequences for the reporting organisation in say a damage to its reputation. It has not worked in money laundering, where there is a statutory obligation to report, so what is the expectation that fraud will be different? Indeed, it might just create another expensive bureaucracy and detract resources from the frontline. Moreover, we need a better grasp on why frauds are not being reported as a basis for action. Mike, drawing from the experience of tackling bribery and corruption, would prefer a focus on a duty to prevent economic crime and include fraud as a part of that. There is also an issue about whether fraud reporting is a distraction, often those who initially lose data, an airline or solicitor say, are not those who suffer the loss, that falls on the financial sector, suggesting the spotlight is often not focussed correctly.

Lee Fitzgerald declares she would be surprised if there was compulsory reporting and for several reasons. The first is that there is already a focus on reporting different offences to different authorities under a variety of regulations that the whole process is a cottage industry, albeit a disjointed one. In short, there is already enough data, what would be the purpose in generating more? Second, and in a different way, and outside banking, there are lots of different types of fraud, they may well share similarities and learning opportunities but the route to achieving that is undermined by data sharing restrictions enshrined in law. Even within one authority, such as the NHS, there are restrictions on what the regions can share. The key then is not more data but better sharing protocols. Failing that, the focus should be on investigations, but reporting is expensive and can be a distraction from what will really impact on fraud,

David Shepherd invites us to consider what the purposes of compulsory reporting would be and suggests two primary reasons. The first is to enable investigations to take place leading ultimately to more convictions and perhaps less offending. Second, to better measure the scale of the problem. He then outlines the limitations of both approaches. For example, he points to the insurance industry where they have highlighted the problem of distinguishing fraud from error. For David the better option would be to create transparency within organisations to determine the extent to which leaders fully comprehend the fraud risk. In other words, to foster good governance. He also supports better data sharing, and then making better use of what is shared. There are lessons to learn from what has happened with regards to tackling bribery, the focus has made some people think more, albeit it has made consultancy companies rich and that money could have been better directed. Finally, he calls for better measurement, you will hear him discuss the benefits of assessing volume, velocity and value as a precursor to determining what should be reported.

This webinar highlighted a range of challenges to the position that the mandatory reporting of fraud was a good idea; by and large there was not a lot of support. In calling for more investment in the state police – the private sector lacks the powers – it underlines a concern that the real issue is not the need for more data but the need for more action. At the end of the webinar the panel were asked what would then improve the response and they highlighted a range of factors including: more sharing of data; better understanding of what data sharing involves and how the benefits can be maximised; harnessing the data that are available to draw the best possible understanding of the fraud problem; investing in fraud policing; and focussing on a duty to prevent fraud. A headline challenge is to create a culture of responsibility, and that one is on-going.

Martin Gill
8th June, 2021

Find out more about the upcoming research on “Barriers to the Mandatory Reporting of Fraud: Finding Solutions and Sharing Best Practice

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