Five key issues affecting counter fraud planning in 2017

19-12-2016

The influence and impact of fraud and corruption on local authorities, their communities and the wider public sector, have been well documented in 2016. Themes such as raising awareness of common types of fraud along with how to identify and prevent fraud and corruption in the first instance have also proved influential this year. Looking ahead, what other issues do counter fraud professionals face heading into 2017 and what steps should they be taking?

Clearly, the lack of funding will continue to dominate strategic direction and implementation. However, improvements in shared services, technological advancements, national, regional and local initiatives and alternative funding routes all have the potential to enable improvements in the fight against fraud.

1. Shake-up of data protection laws

Data sharing across public sector agencies has proved challenging in 2016 and this is likely to increase in 2017, as preparations for the biggest shake-up to the data protection laws in 20 years get underway. Whilst there have been success stories with local authorities cross-checking fraud occurrences there are still areas for improvement, particularly in relation to connecting housing and benefits fraud investigations. 

The mass modernisation of data protection laws will throw-up many challenges when it comes to cross-referencing individual data and this isn’t something to be ignored. Organisations will be required to show how data is managed, and improvements in transparency of infrastructure may be required.

Empowering local authorities to co-ordinate their activities and look at collaborative ways of tackling common frauds is something which must be addressed. Local authorities would benefit from public sector agencies being open to working with partners. 

2. Stop fraud at the outset

One issue raised in 2016 is that too much focus has been given to investigating fraud rather than preventing it in the first place. Empowering local authorities and counter fraud professionals through improved training and additional resources to stop fraud at the outset should be an imperative for 2017.

The scale of fraud and corruption is such that the police do not have the resources to investigate every single case. Therefore, emphasis must be shifted to stopping and preventing fraud at the point of origin. This should form a core part of risk mitigation planning and activity.

3. Digital transformation

Digital transformation will continue to be a major influencer. Technological advancements are moving at a fast pace and fraudsters are exploiting the holes in cyber security. Stopping fraud in its tracks requires investment in new technologies - and a transformation to adapt to new working practices – but these have the potential to change the counter fraud game significantly.

Local authorities and public sector agencies are exploring collaborative ways of addressing common challenges; using shared services as a facilitator for example. Digital transformation will be crucial in enabling counter fraud professionals to effectively confront more sophisticated online crimes and to prevent fraud from happening in the first instance. Digital strategies will need to keep pace with and utilise developing technologies on a national and regional scale.

4. Limited resources strangling counter fraud initiatives

Lack of funding for counter fraud teams and professionals will remain a common hurdle for local authorities, and it will continue to impact and influence strategic direction in the year ahead. Yet, there are excellent examples where local authorities have managed to overcome this barrier.

The use of shared services is one of the resounding success stories of the last decade and is now a well-established, proven model helping local authorities to reduce costs, improve service quality, and increase operational excellence across many areas including counter fraud.

Shared services can help organisations with faster decision-making, more informed policy making, improved workforce management and alignment of resources. These benefits enable counter fraud specialists to increase interactivity with their peers and team through improved communication and responsiveness.

Shared services also help counter fraud teams by reducing duplication and enhancing the accuracy of information, all of which is vital when tackling fraud and corruption. 

Investigative capability and capacity are also improved through shared services initiatives. In-house capability to investigate and prevent fraud may be limited, yet this can be supplemented through shared services. Rather than turning to outside investigators, in-house fraud teams should make use of cross-borough resources as well as collaborating. Fraudsters work without borders, and therefore counter fraud professionals should too.

5. Counter fraud strategy should be set from the top down

Establishing good counter fraud governance remains vital, with counter fraud strategy being set from the top down. Assigning ownership of fraud risk at the top ensures overall responsibility rests with senior decision makers, which in turn helps local authorities and public sector organisations to better manage potential conflicts, for example, where resources should be allocated between competing departments.

Equally, by placing ownership at the top, organisations can establish a culture and strategy for tackling fraud with the escalation of fraud risks being identified early. Alerting stakeholders and influencers to the cost of fraud may also help to discourage short term approaches to fraud, corruption and bribery as well as encouraging support for investment in fraud prevention measures.

Put simply, in 2017 counter fraud strategy should be at the top of everyone’s list.

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