Financial crime

 

Fraud is an area of regulation where we (the FSA) align our goals with those of regulated firms.We recognise that firms already have strong incentives to manage fraud risks - fraud costs them money and losses can affect firms' profitability.

In 1999 the government estimated that fraud cost firms £1.5 billion a year. A more recent 2006 estimate on identity fraud suggested the cost to the UK economy is now £1.72 billion a year. Data on fraud is notoriously hard to come by, however, these figures give us an idea of the extent of the issue.

We believe that collaboration is crucial to making a difference in the fight against fraud, so we launched our fraud policy, "Fighting Fraud in Partnership", in October 2004. We believe that everyone fighting fraud needs a shared vision of what we are trying to achieve. Broadly speaking, in promoting a partnership approach to tackling fraud we aim to work with the grain of the market and to encourage collaboration. Firms have historically been reluctant to reveal that they have been the victims of fraud, fearing reputational risk. We want to foster an environment where information sharing is not only encouraged, but actively seen by all as a means to reduce fraudulent practices and so increase profitability. For example, pilot projections for shared analytical techniques in the insurance industry suggest that firms could prevent frauds and save up to £200 million a year.

Who is in the partnership?

  • Regulated firms.
  • Trade associations – with an emphasis on collaboration across the industry for generic risks such as staff and identity fraud, and not just limited to specific sectors.
  • The police and other law enforcement agencies, such as the Serious Organised Crime Agency (SOCA).
  • The government – raising the priority given to fighting fraud.
  • The FSA – in our supervisory, enforcement and consumer work.
  • Key service providers to the industry. This involves organisations that provide services to combat fraud, or are potential victims of fraud. For example, consultancy firms, credit reference agencies, fraud data-sharing specialists etc.
  • The Fraud Advisory Panel.
  • Consumers and the general public. This can involve perpetrators, victims or 'whistle blowers'.

Related links

Speech by Edna Young:
Fighting Fraud in Partnership - 27 June 2005

Speech by Philip Robinson:
The FSA’s new approach to Fraud – Fighting Fraud in partnership - 26 October 2004

Discussion paper:
DP 26: Developing our policy on fraud and dishonesty - December 2003