Fraud Prevention

Like any other business organisation, building societies can potentially be affected by a wide variety of fraud and dishonesty offences. These include credit card fraud, insurance claimant fraud, forgery, identity fraud, and theft by employees.

Fraud and dishonesty offences committed against financial institutions are sometimes perceived to be ‘victimless’ crimes, which ‘merely’ hurt powerful institutions with ‘deep pockets’. This is untrue. Fraud can cause great inconvenience to individuals – for example, it can take victims of identity fraud up to 300 hours to rebuild their credit history. It can bring institutions down (as the collapse of Barings demonstrated) and cause employees to lose their livelihood and investors their life savings.

There is also strong evidence of a link between certain types of fraud and organised crime. For example, organised crime rings are active in counterfeiting plastic cards, and in identity fraud. Fraud is one of the means by which criminals finance their criminal activities. If not controlled, it will be an increasing source of criminal profits.

Less dramatic, but still important, is the general effect of fraud on the costs of financial services. Fraud pushes up the prices of financial services for the customer.

In addition, the financial services sector is vital to the UK economy. A crucial factor for its continued success is its reputation, and market confidence, both of which can be put at risk by fraud.

The BSA co-ordinates a panel of building societies and other institutions to share experiences and discuss ideas to help identify and tackle fraud.

The BSA also issues guidance to assist building societies in the formulation of an overall strategy for tackling fraud. It is hoped this will engender improved working practices in this important area.