Background

To ensure that the FSA is meeting is statutory objective of 'reducing financial crime', the organisation has established the Scale and Impact Project. The project is tasked with developing concepts and methodologies to measure the scale of financial crime, the harm caused by the result of it, and to compare the severity of different types of financial crime. The concepts and methodologies will also ensure that the FSA is tackling the problem in a risk-based, and proportionate way as well as helping the organisation to achieve its principle of using resources in the most efficient and economic way.

Objective

The objectives of the project are to:

Gain a better understanding on the scale, incidence, and impact of financial crime in the UK and use these concepts and methodologies to assess the scale, incidence, and impact of financial crime.

To establish these methodologies as part of the FSA's ongoing work programme, so that the FSA is in a position to use the conclusions in its normal processes for assessing risk and allocating resources, as well as being able to repeat the assessment at intervals enabling financial crime trends to be monitored over time.

To assess the likely impact of the FSA's financial crime work and interventions.

Method

The Scale and Impact Project has been split into two phases.

Phase I - conducts a critical analysis of published work and current projects underway producing a financial crime typology typology that relates to the concepts of harm, social harm, measurability and market failure. During 2007 we completed the procurement process for Phase I and we are now working with a small team of academics/consultants to work on delivering the results by the end of Q2 2008. We will endeavour to make these findings available to you.

The critical analysis should consider of the following academic issues:

  • Victim centric approaches to financial crime-do these provide the best approach?
  • Conceptualising cost/harm/social harm-previous work will demonstrate that academics have taken different approaches to and used different definitions of harm.
  • Sample size-Does relevant past work consider the quality of sample size and the availability of data in order to gain a good sample?
  • How have previous studies approached measurement of financial crime? Have they used top down or bottom up approaches?
  • Time-lags-How has previous work accounted for time-lags in reporting of crimes and the impacts?
  • The counterfactual issue-How has other work considered this issue?
  • Does any past work consider the benefits of financial crime? If so, how?
  • Past work on the economics of crime-This may help the FSA to establish the areas where it can make a difference.

Phase II is concerned with developing concepts and methodologies for measuring the scale and impact of financial crime. It is due to be delivered by Q4 2009, however, the commencement of Phase II is dependant on the results of Phase I.