Countering fraud within social housing: lessons for us all

10-11-2016

by Jo Pitt, CIPFA Principal Policy Advisor Local Government

CIPFA welcomed guests to the Housing Fraud Conference recently, sponsored by Zurich Municipal. The day was full of ideas, solutions and valuable suggestions about how organisations can combat the threat of fraud within the social housing environment. While it is never possible to capture the enthusiasm of the audience or vibrancy of the actual day, below are some of the key ideas that would benefit the culture and outcomes of any social housing organisation during these difficult times.

It is well recognised that the world of social housing is under intense pressure. Social housing faces increased demands, demographic change and a lack of adequate funding and this was the backdrop for the context setting presentation by James Prestwich, Head of Policy at the National Housing Federation. As James explored the issues in more detail including right to buy, income-based rents and securing investment, it was clear that although the future was far from certain everyone had lessons to learn and there was strong evidence of success.

Deterrent is key

Throughout the whole event it was clear that one of the most important elements in the equation was a strong deterrent. Every speaker talked about the need to prevent people from committing fraud as this is the best use of resources.

“When fraud is identified it is essential to communicate the story to the public with the clear and unequivocal message that if you commit fraud you will be caught,” Rachael Tiffen, Head of CIPFA’s Counter Fraud Faculty, stated as she spoke about the importance of countering fraud within housing. 

Good policies, procedures and trained staff all combine to maximise the ability of an organisation to deter fraud. However it is also about ensuring that where fraud is identified, a zero tolerance message is communicated clearly to the public. Stating that fraud is not tolerated and action will be taken is an essential element of any counter fraud culture. This strong and consistent message needs to come from leaders as well as the fraud team themselves, the audience was told. 

Case studies were used to illustrate this message but perhaps one of the most memorable was later in the day from Kat Scott at Zurich Municipal who, during her presentation, showed us how the use of social media such as YouTube is now playing its part in both capture and deterrent. She spoke about how working together with partners has driven highly successful results for Zurich in their fight against insurance fraud. Fundamental to this is a zero tolerance approach, including creating legal precedence to combat fraudsters.

She said that “insurance fraud results in increased financial costs, which is why we work hard to minimise this”.

“Fraud develops over a period of time, often starting very small, and just escalates” was an observation made by Stephen Lewis from Mazars and it struck a chord with the room when discussing procurement. His slides showed that if staff did not think they could be caught then procurement fraud would increase. 

His handy tips on what sort of behaviours to look out for resulted in a lively discussion on whistleblowing. He also reminded the delegates that fraud is not just an independent external activity but can also take the form of a collaborative abuse.

Update procedures for right to buy

This was one of the biggest actionable items delegates at the conference came away with. Tri-borough’s Head of Fraud Andy Hyatt’s detailed session on right to buy resonated with all those in the audience – local authority officers because they have been dealing with this for over 20 years and housing association staff who are just about to start this journey. 

Much of this discussion was around the increasing concerns about money laundering and the need to make changes. Interestingly the role of the fraud officer was clearly not just about fraud but also to protect those in a vulnerable position who were being taken advantage of by fraudsters. 

As Andy Hyatt said “we are seeing investment companies being set up to take advantage of this situation. Investment companies gifting the money to buy the property, they keep it for five years and then they sell it at a profit. Often this means that tenants then leave with the money but come back through the door 12 months later as homeless.”

Tips from Andy’s team included:

  • challenge how to prove the source of the money
  • undertake visits to check identity
  • train up other staff to be observant and aware of fraud
  • use anti-money laundering forms
  • identify fraud through data analysis.

There was a compelling video used by Marcus Hayes from BAE which showed the complexity of identifying those who commit fraud when they operate across different organisations and across different regions. Marcus commented on some techniques that effectively use data to identify those who had committed fraud.

The audience were asked the question, why shoot in the dark when the clever use of targeted information could provide high quality evidence allowing them to prioritise their actions? This use of analysis around complex data was also an element of Kat Scott’s presentation which continued to emphasise that it is important to understand the information available in order to make the strongest case. Data along with a narrative provides the full story behind the fraud.

By bringing together and enhancing data, fraud officers are in a more powerful position to identify fraudulent activities than they have ever been in the past.

In summary, there were many tangible benefits of this conference in the form of both practical advice and increased background knowledge. There was also an increased passion for continuing the fight against fraud. It was very evident that those in the room had a strong sense of justice. The desire to protect the vulnerable as well as identify fraud was clearly apparent.  

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