Carrying out counter-fraud activities to identify customers who set out to defraud the system
This section includes good practice on:
- Introduction
- Fraud referrals
- Risk profiling referrals
- Action on referrals
- Fraud investigators code of conduct
- The LA fraud policy
Introduction
To ensure that counter-fraud activities are properly managed, it is important to focus resources on fraud reduction, to identify, investigate and rectify administrative weakness and to assure Members and senior officers of the integrity and quality of investigations.
Counter-fraud activities need to be underpinned by up-to-date corporate policies and procedures. Effective investigative work to reduce the levels of fraud and error in the system includes:
- quality fraud referrals
- risk profiling referrals
- action on referrals
- prompt action on referrals accepted for investigations
Good quality fraud referrals are important because they:
- are a key step in detecting and deterring fraud
- establish a Local Authority's (LA's) reputation for rigour in claims processing
- give an indication of the type of fraud which may be prevalent in an LA area
- help to identify weaknesses in benefit administration systems and the remedial action necessary
- assist in the full and effective use of fraud investigation resources
With limited resources it is important that investigations are focused to make best use of the resources available and to ensure that each case is thoroughly investigated and proper consideration given to recommending closure or sanction.
It is vital that LAs have specific counter-fraud policies, built on the policy objectives for the benefit service as a whole. These policies should be supported by comprehensive procedures for the counter-fraud section to ensure consistency.
Fraud referrals
Good practice includes:
- publicising guidance on making a referral to all employees working for the LA. It should provide fraud awareness sessions at induction and be supported with an ongoing programme of fraud awareness to employees who are involved in Housing Benefit/Council Tax Benefit (HB/CTB) administration, housing and council tax collection, external employees to whom such work is outsourced and any employees working for a Registered Social Landlord (RSL) or registered provider (RP) in England who are involved in the verification of HB/CTB claims
- providing a dedicated telephone service (or National Benefit Fraud Hotline), which is staffed during office hours, for the public or employees to report suspicions and answerphone service outside working hours
- providing a short text message service for reporting suspected fraud
- ensuring the referral form layout is user-friendly and, when possible, matches the input screens of the fraud case-management system
- a good referral form should include prompts to record:
- the customer's name, address and benefit reference number
- specific details of the type of fraud suspected
- the number of people involved in the alleged fraud and the duration of that involvement
- a description, including any distinguishing features, of the customer and, if appropriate, their real or alleged partner
- any other addresses used by the customer and any partner
- whether the case needs a visit
- ensuring the fraud investigation team monitoring covers:
- the number of referrals received
- referrals by type
- referrals by source
- referrals resulting in prosecution or other alternatives by type
- referrals where no fraud is found
- the amount and number of overpayments established through fraud investigation
- referrals that are not suitable for fraud action and the reason why not
Risk profiling referrals
Good practice includes:
- ensuring referrals are risk assessed, with priority given to medium to high-risk cases, with the results of investigations informing regular review of the risk assessment process
- having a prosecution policy in place which identifies which factors determine whether to initiate a prosecution, including the seriousness of the offence, the accused’s physical and mental condition and the quality of the evidence
- ensuring, in relevant cases, the LA gathers intelligence through a discrete intelligence function within the LA, through the National Anti-Fraud Network (NAFN) or through the DWP Operational Intelligence Unit (OIU)
- providing quarterly feedback to Benefit, Council Tax and Housing employees on the activities and success of fraud investigations to encourage further good quality referrals
- monitoring the effectiveness of current processes and amending policies and procedures when experience reveals procedures to be inadequate. Consider a change control mechanism to record when changes are made to procedures and supporting logic
- publicising the dedicated telephone service for the public to report suspicions of fraud on Council Tax bills, public areas in the LA, in local free newspapers, flyers with LA employee payslips, posters in common areas such as GP's surgeries
- providing reports to senior management to sustain accountability for performance and ensure compliance with agreed procedures
- recording Do Not Redirect (DNR) post on the day it is returned to the LA. Sifting, referring and investigating all cases when it appears benefit has been paid whilst a redirection has been in force
- taking appropriate action defined in the Administration, Security and Fraud Partnership Agreement if standards are not met. Bulletin G7/2008 and the Agreement published with it provide more details
- identifying trends to inform a risk analysis to ensure efficient and effective use of scarce fraud investigative resources
- using standard letters setting out the authorised individual powers and their limitations for issue to persons or bodies that may be subject to investigation.
Action on referrals
Good practice includes:
- sifting referrals within an average of 10 working days* of receipt and using a management information system to track all fraud referrals that are allocated to a named investigator and the progress made on them
Note: *This excludes bulk data referrals such as the National Fraud Initiative (NFI) and Housing Benefit Database Matching Service (HBDMS) data-matches. These types of bulk-referrals should be managed and sifted as a source of potential investigation cases - providing a checklist for investigators which may include, amongst other things:
- pursuing all appropriate lines of enquiry to establish evidence that benefit has been, or will be, wrongly paid
- considering all potential information sources
- applying all appropriate investigation techniques to secure evidence
- interviewing potential witnesses and, if appropriate, taking written statements, in the proper form, from them
- commencing investigations within an average of 10 working days of referrals being sifted
- ensuring counter-fraud files contain:
- the original referral, letter or report of a telephone call
- a summary sheet which shows the latest and previous action taken
- sequentially numbered progress sheets recording all action taken. Each entry should be signed and dated
- original copies and a list of all evidence
- witness statements
- a closing report summarising the progress and recommended outcome of the investigation
- a plan of how the investigation will take place
- management checks ensuring, amongst other things:
- that investigations are carried out in accordance with the law and internal procedures
- all proposed surveillance activity is carried out in accordance with the standards of Regulation of Investigatory Powers Act (RIPA) 2000, Regulation of Investigatory Powers Scotland (RIP(S)A) 2000, e.g. the authorisation form is authorised by a second or third tier officer and copies are placed on the appropriate files to maintain an audit trail
- a consistent approach by each investigator
- an even-handed treatment of customers
- employees' performance is monitored
- the giving of advice on the direction of the investigation, such as other avenues to explore, and minimising any further delay
- the authorisation of either a sanction, including prosecution or file closure
- that there is a clear audit trail
Fraud investigators code of conduct
Good practice includes:
- ensuring staff are aware of appropriate legislation and that fraud investigation officers understand that under section 67(9) of the Police And Criminal Evidence (PACE) 1984 they are persons charged with the investigation of crime and are, therefore, subject to the same restraints as the police, especially those contained in PACE. In Scotland fraud investigation officers adhere to the Test of Fairness
- maintaining a separate fraud file with restricted access for all investigations, and such records as are needed for the purposes of disclosure, under Criminal Procedure and Investigations Act (CPIA) 1996, RIPA 2000, or (RIP(S)A) 2000 are kept in accordance with PACE
- ensuring fraud investigators keep a proper record for their own personal use of their actions so that it can, if necessary, be used as an aide memoir when giving evidence. Consider the use of notebooks with numbered pages that can be subject to periodic management checks
- ensuring interviews conducted under caution are in accordance with PACE or the Test of Fairness (Scotland) when there are reasonable grounds based on known facts or information which are relevant to the offence
The LA fraud policy
Good practice includes:
- ensuring there is a Member approved anti-fraud policy supported by a fraud business plan against which the progress, outcome and quality of investigations are monitored
- ensuring all appointments of authorised officers are in accordance with the law and monitors the use of these powers or uses a centralised intelligence resource such as NAFN or a DWP OIU or in conjunction with neighbouring LAs
- choosing the Royal Mail 'DNR' service in accordance with the legislation and procedural guidance, see HB/CTB Guidance Manual, Royal Mail 'DNR' service
- adhering to the principles of the National Fraud Partnership Agreement with the Fraud Investigation Service (FIS)
- putting in place systems to ensure that only lawful requests are sent to DWP for Her Majesty's Revenue and Customs (HMRC) information
- participating in Local Authorities Investigation Officers Group forums to gain up to date intelligence
