Session 1B – Fraud - Collin Belcher


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Session 1B – Fraud - Collin Belcher

  1. 1. Annual Fraud Indicator 2013 Charity Fraud Collin Belcher Senior Manager National Fraud Authority
  2. 2. What is the Annual Fraud Indicator? The Annual Fraud Indicator (AFI) is a compendium of fraud loss indicators. In line with Fighting Fraud Together, the AFI covers fraud against all types of victims in the UK be they public, private, not-for-profit or individuals. It also includes primary research in the form of surveys e.g: • The Private Sector Survey • The Charity Sector Survey The report brings together existing estimates of fraud in the public domain e.g: • HMRC (National Statistics) • DWP (National Statistics) • NHS • UK Payments • ABI
  3. 3. Measurement of fraud NFA business plan 2012-13 “To improve our measurement of the scale and breakdown of the fraud problem and to develop more sophisticated and rigorous measures of performance across all areas of fraud awareness, prevention and enforcement”. The AFI will be improved in the following ways: • There will be improved confidence levels in the fraud estimates across different sectors. • Gaps in our estimates of fraud losses will be reduced. • Where we have reliable measures of loss affecting particular sectors, we will begin to track changes in fraud loss levels.
  4. 4. Annual Fraud Indicator 2013 • The AFI 2013 is the NFA’s fourth Annual Fraud Indicator • This year the report puts fraud loss to the UK at £52 billion • The AFI does not indicate trend – it seeks to highlight the potential scale of the problem. • The AFI is an important tool in raising awareness of fraud
  5. 5. AFI 2013 Headline Findings • The AFI covers fraud against all types of victims – public, private, charity and individuals. • This year’s report includes identified fraud loss of £15.5bn and hidden fraud losses £36.5bn by type of victim. This equates to £52 billion. Fraud by Victim Type Private Sector fraud - £21.2bn Public Sector fraud - £20.6bn Charity Sector fraud - £147m Individuals - £9.1bn
  6. 6. AFI 2013 – Identified fraud losses ‘Identified fraud’ - fraud that has been measured, or extrapolated based on a measurement exercise or survey.
  7. 7. AFI 2013 – Hidden fraud losses ‘Hidden fraud’ – fraud that has not been detected nor identified through a measurement exercise or survey.
  8. 8. Charity Sector Survey 2013 The survey research design improvements. • Sampling frame excluded charities with less than 100k income: • • Better specification of the fraud loss estimate questions to enhance cognitive understanding: • • Assumptions have been applied to the data received from larger charities to estimate a small charities fraud loss figure in the overall fraud loss estimate. Reducing ambiguity in the question and ensuring more consistency in responses. More robust analysis: • Outliers and bias designed out by the above. • Weighting the percentage fraud loss by income band.
  9. 9. Breakdown of loss Quantitative survey with 1,599 charities. 9% were a victim of fraud. Estimated losses of 0.22 per cent of income (£66bn), with 0.04 per cent lost to identified fraud and 0.17 per cent lost to hidden fraud. This is approximately equivalent to £147m per annum. Victim Identified Hidden Total fraud loss Up to £100,000 £1m £4m £5m £100,001 - £500,000 £11m £5m £16m £500,001 - £5 million £14m £9m £23m £5 million + £4m £99m £103m (Income band)
  10. 10. Fraud types suffered
  11. 11. Fraud enablers – cyber and insider • 1 in 10 (9.2%) of charities with an income over £100,000 detected fraud • 13.6% of victims said that the fraud(s) they had suffered were cyber-enabled • 23.1% of victims said that the fraud(s) they had suffered were insiderenabled • Only 21% of charities attempt to measure their fraud loss
  12. 12. How does the charity sector compare to others? 3.76% Public sector 1.03% Individuals 0.54% Private sector 0.22% Charity sector Losses quoted as a percentage of turnover/income