Get documents about "FINANCE AND RESOURCES OVERVIEW AND SCRUTINY
Shared by: linxiaoqin
-
Stats
- views:
- 0
- posted:
- 2/10/2012
- language:
- pages:
- 26
Document Sample
FINANCE AND RESOURCES OVERVIEW AND SCRUTINY COMMITTEE
28TH JULY 2003
REPORT OF ASSISTANT CHIEF EXECUTIVE(FINANCE, IT & RESOURCES)
CORPORATE RISK MANAGEMENT-COMPENSATION CLAIMS FRAUD TASK
TEAM-PROGRESS REPORT
1. Introduction and Background
1.1. The former Finance and Performance Overview and Scrutiny Committee
considered a paper on 12th December 2002 on Corporate Governance and Risk
Management (EDRS ref. 02120014). The report included proposals to establish
a number of Task Teams to be charged with taking forward initiatives which
reduce the insurance liabilities of the Council in the medium and long term. One
initiative related to Compensation Claims Fraud and the purpose of this report is
to report progress made in this area since the initial meeting of the Task Team
on 27th March as required by the resolution of the Committee.
1.2. The Insurance industry is very concerned about the present trend in insurance
fraud. Attached at Appendix A is a paper from the Association of British
Insurers which articulates those concerns. Appendix B is a report published in
the Guardian on the Local Government conference which discussed current
concerns. As the work of the Task Team has progressed the following
development have taken place nationally which it is believed will strengthen the
position of the Insurers and thus the Council in the future. These include:-
a) the establishment of a National Fraud Group via ALARM ( the
National Forum for Risk Management in the Public Sector) providing
input to the Task Team;
b) a publicity campaign by ALARM aimed at raising awareness of this
issue nationally; and,
c) moves at Government level to standardise the costs which claimants’
solicitors can charge, the percentage ‘success fee’ and when insurance
(to cover no win/no fee agreements) is and is not required.
2. Progress by the Task Team
2.1. The Task Team have agreed a document setting out its terms of reference which
is attached at Appendix C. This document sets out the purpose of the Team, its
membership, the work to be performed, the outputs from the Team and its
reporting responsibilities.
2.2. A key piece of work in terms of outputs is a Compensation Claims Fraud
Strategy for Oldham MBC which will be a published document. A draft
document is set out at Appendix D. The strategy sets out the proposed approach
to be adopted to potential fraudulent claims and the infrastructure which will be
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
put in place to implement this approach. Work is ongoing to identify the
resource requirements. Once identified, careful consideration will be given to
the cost/benefit of the initiatives required before specific proposals and their
funding are brought to Members. This document will be the cornerstone of the
Council’s approach to dealing with fraudulent claims and COMT are asked to
frank the Strategy.
2.3 The Strategy is supported by an internal document ‘Compensation Claims Fraud
Procedures’ which is guidance on best practice and covers risk assessment,
investigations and claims procedures and protocols. Also covered in this
document is the fraud warning to be included in all claim forms and
acknowledgements sent to third parties.
2.4 An important strand of the Council’s approach to fraud identification will be
data matching exercises internally within the Council, subject to the constraints
of the Data Protection Act. Work is also ongoing at national level on data
matching, involving the Greater Manchester authorities between authorities and
a ‘research and development’ exercise is currently being co-ordinated by the
Audit Commission which Oldham is taking part in.
2.5 Where insurance claimants are found to owe the Council money, it is the
intention to ensure that the claimants’ debts to the Council are recovered as part
of the settlement. Work is being undertaken with the Council’s claims handlers,
Gallagher Bassett, to agree the processes which must be followed to protect the
Council’s interests.
2.6 Of course nothing matches the impact on potential insurance fraudsters of the
successful prosecution of individuals who have already carried out this type of
fraud. The development of a Prosecution Policy forms part of the action plan for
the implementation of the Council’s claims Fraud Strategy. In addition an
approach has been made to the Chief Constable by the Greater Manchester
Authorities to highlight their concerns at the spiralling costs of claims and
seeking police co-operation and assistance in dealing with fraudulent claimants.
At a local level the Task Team have had a very productive meeting with a
representative from Police based in Oldham. The Police are willing to take on
any criminal complaint made to them subject to their rigorous standards of
evidence being met, they are prepared to give advice on those standards. Advice
was also given on the robust investigation procedures which should be followed
following each claim. Whilst there may initially be additional resource
implications here it is believed that once the Council is known to robustly
investigate claims of this nature then the number of claims received will fall. All
this work will be linked to a strengthening of front line risk management,
particularly on Health and Safety to ensure that claims can be defended in court.
2.7 The work being undertaken by the Task Team in Oldham has come to the
attention of the National Anti Fraud Network (NAFN) and its Project Manager
has offered to visit Oldham to make a presentation which sets out how NAFN
can assist.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
3. The Future Agenda
3.1 The implementation of the Compensation Claims Fraud Strategy now has the
highest priority for the Task Team and the action plan for implementation will
be agreed at the next meeting of the Team at the end of July. Other topics on
which work will start at that meeting will include external communications and
co-operation with other external organisations, the development of performance
indicators and an exploration of how fraudulent Health and Safety claims by
employees might be prevented.
4. Recommendations
4.1. The Committee is asked to note the report and overview and scrutinise the
Compensation Claims Fraud Strategy.
The following is a list of the background papers on which this report is based in accordance with the requirements
of Section 100D(1) of the Local Government Act 1972. It does not include documents which would disclose
exempt or confidential information, as defined by that Act.
Files held by Assistant Chief Executive (Finance, IT and Resources) Tel: 0161 911 4900
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
APPENDIX C
COMPENSATION CLAIMS FRAUD TASK TEAM
TERMS OF REFERENCE
Purpose of the Task Team
The purpose of the Task Team is to ensure that the council manages the risk of fraud
effectively through the development of council policies and procedures which are
communicated and implemented throughout the council
Membership
- All departments
- Police
- 1st Choice Homes
- Contractors eg OCLL
The Task Team will:
- advise on the risk management implications of the risk, and the potential impact on the
council
- identify any service specific issues relating to the risk, and ensure that
o departments put in place procedures to ensure that claims are reviewed from a
fraud perspective
o that the procedures for investigating incidents and claims are adequate and that
there is a close and proper liaison between local staff investigating claims, the
claims function at the corporate centre, and the fraud section, exchequer.
o there is a proper understanding of departmental responsibilities and those of the
corporate centre
- adopt a cost-benefit approach to any proposals to manage the risk
- liaise as appropriate with internal and external resources to identify and manage risk
(including the police, health and safety and fraud agencies)
- disseminate details of the strategy/policy to relevant services and staff, identifying
appropriate responsibilities
- establish any training requirements of managers and staff with regard to implementation
- develop appropriate performance indicators and where appropriate, agree targets against
which the success of the council’s actions will be evaluated
- ensure that the strategy is implemented effectively across all services
- work with departments to assess the impact on budgets and any risk financing
requirements
- identify audit requirements
By means of
- identifying and promoting initiatives and policies designed to help manage the risk
- co-ordinating information across task teams, council departments, other public and
private organisations, insurers
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
- sharing experience, good practice and information on risk,
- promoting a cost-benefit approach to the allocation and prioritisation of resources and
to initiatives designed to minimise risk
- identifying appropriate training
Outputs
- Chief Officers are aware of the problem and what they need to do to minimise the risk
of fraud within their operations
- A Claims Fraud Strategy, to conclude:
o Publicity/communications strategy
o Prosecution framework
o Data protection policy
o Partnering issues
- Guidance on best practice for dissemination throughout the council
- Where appropriate, develop and publish a council policy documents
- A 6-monthly update on work to date to the council’s Overview and Scrutiny Committee
- Identification of training needs and resources to meet those needs
- A completed fraud risk register
- Performance Indicators
Reports To (every 6 months)
- Chief Officers Management Team
- Overview and Scrutiny
Date Reviewed
8th May 2003
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
APPENDIX D
Oldham MBC
Compensation Claims Fraud Strategy
(Draft 4th July 2003)
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
Contents
Con Section
Compensation Claims Fraud Policy
Introduction 1
What Constitutes a Fraudulent Insurance Claim? 2
Risk Assessment/Analysis 3
Roles & Responsibilities 4
Fraud Prevention 5
Deterrence 6
Detection 7
Claims Fraud Response Plan & Investigation 8
Claims Fraud Data Capture, Recording & Reporting 9
External Communication and co-operation with others 10
Fraud Awareness and Training and Creating an Anti-Fraud 11
Culture
Resources 12
Quality Assurance 13
Conclusion 14/15
Reference Point & Information
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
Appendices No
Task Team Terms of Reference 1
Proceeds of Crime Act 2
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
Compensation Claims Fraud Policy
‘It is the policy of Oldham MBC that all Councillors and members of staff
should exercise proper stewardship of public money and that appropriate
systems and procedures, incorporating efficient and effective internal
controls, are in place to prevent and detect compensation claims fraud and
corruption.
The Council will not tolerate fraud or corruption and is determined that all
instances will be fully investigated and the appropriate action taken against
all those concerned’
Signed………………………………………………..
Chief Executive
Date……………………………………………………
(Source: Oldham Council Anti-fraud and Corruption Strategy ss 1.3 and 2.1)
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
1. Introduction
Local Council’s provide a wide range of services, if due to defects in these services loss or
damage is suffered then the Council may be liable to pay compensation to members of the
public or other bodies.
A significant threat is now being posed to the Council by people who deliberately try to submit
fraudulent, frivolous, or exaggerated compensation claims. This has led to difficulties in
obtaining insurance cover, particularly for liability claims. Effectively this meant that for the
foreseeable future there will be no insurance cover. The council has contributed a further £1.3m
in extra funds to pay for the claims which has resulted in a 1.75% increase in council tax for
2003/04.
Although there are no accurate industry figures currently available regarding annual fraud
losses to insurers, the most recent Association of British Insurers (ABI) estimate, indicates the
annual industry fraud losses to be in excess of £1billion.
The council has a duty to ensure that compensation is paid to those who are entitled to it, that
the systems used for this are secure and to have a policy and procedures to manage the risk of
fraud across all council activities.
The purpose of this document is to clearly outline the Oldham MBC Anti Claims Fraud
Strategy, and in a simplistic/plain English format, suitable for reference by all areas of the
Council.
This strategy is a “living document” used in an environment that is constantly changing,
sometimes requiring a rapid response and continual improvement.
The OMBC Anti-Claims Fraud Strategy, is consistent with the following corporate policies.
• The Council’s Constitution and Financial Procedure Rules
• Oldham Council Anti Fraud and Corruption Strategy – this policy document states the
culture and declaration of intent of OMBC that fraud and corruption will not be
tolerated.
• Codes of Conduct for Members and Officers, including the Council’s Whistleblowing
Policy
• Corporate Plan (Well Managed Council)
• Relevant Service Plans
For instances of suspected compensation claims fraud that fall outwith the definitions
highlighted in (2) below, the Risk and Insurance Section should be contacted in the first
instance.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
2. What Constitutes a Fraudulent Insurance Claim?
Fraud is not specifically defined within criminal law, rather it is a generic description applied to
various dishonest acts. Acts of dishonesty linked to fraudulent insurance claims, are
punishable by way of fine, imprisonment or both.
Fraudulent claims may be brought against the council by staff or by third parties. The latter
includes suppliers of claims services to the council, contractors and partners.
For the purposes of the OMBC Anti-Claims Fraud Strategy, claims fraud perpetrated by either
council staff or third parties, is defined as:
• Fictitious Losses or Incidents
Losses or incidents that simply did not occur, but a member of staff or third party claims they
did and deliberately presents a completely false set of circumstances supporting the existence
of a loss or incident, for their financial gain.
• Exaggerated Losses or Personal Injuries
These originate from genuine losses or incidents, whereby a member of staff or third party,
deliberately exaggerates or misrepresents the true extent of their actual loss or personal injury,
above and beyond what they would be ordinarily entitled to, for their financial gain.
• Nondisclosures or Misrepresentations of Material Facts
This relates to situations where a member of staff or third party deliberately fails to disclose, or
misrepresents, material facts that would have bearing on either a claim, or the terms and
conditions of a policy of insurance, for their financial gain.
NB.
The key words in the above definitions are deliberately and for financial gain.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
3. Risk Assessment/Analysis
It is the intention of the Council to target its fraud prevention resources at the areas of highest
risk. Risk assessments have been undertaken which indicate that at the moment Oldham is
most at risk from organized submission of fictitious or exaggerated claims, arising particularly
from:
• Highways tripping claims
• Claims for disrepair from housing tenants
Other crucial issues for the council are the level of awareness and involvement of departments
and staff in the effort to counter fraud, the adequacy of departmental procedures for the
maintenance and management of council assets, training for staff in claims investigation and
handling, and the need for a co-ordinated approach to the management of fraud throughout the
council.
Risks will be kept under constant review by:
- Maintaining and reporting upon a record of all potential compensation claim frauds
- Continually reviewing risk assessments
- Maintaining a risk register identifying how OMBC is addressing on-going risks
Already a connection has been found between suspect claims, and benefit/council tax fraud and
we need to have more information available about the criminal backgrounds of suspected
fraudsters, in part to provide protection to staff and also to inform the claims process. A
‘network’ of information is needed – both internally and externally with regular bulletins to
keep everyone up to date.
Above all, there appears to be grounds for the appointment of a ‘Fraud Liaison Manager’ to co-
ordinate this effort right across the council.
4. Roles & Responsibilities
Managers
Managing the risk of fraud and corruption is the responsibility of management. This is achieved
in particular by implementing this strategy and ensuring that an effective system of “internal
control” operates in their areas of responsibility. Internal controls will be documented in
procedures to be made available to relevant members of staff. Advice on the effectiveness of
internal controls can be had from the Head of Internal Audit.
Managers at all levels are responsible for the communication and implementation of this
strategy in their work area and for ensuring that their employees are properly trained and fully
aware of the Council’s policies and procedures in relation to compensation claims fraud.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
Compensation Claims Fraud Task Team
The OMBC Anti-Claims Fraud Strategy, is managed by the Compensation Claims Fraud Task
Team.
The Task Team incorporates representatives from all departments, Internal Audit and the Data
Protection Officer, is facilitated by the Risk and Insurance Manager and led by the Head of
Finance, and is tasked with being the focal point for all OMBC claims fraud issues. It works
under Terms of Reference agreed by the Council and reports findings and progress to the Chief
Officers Management Team and to Overview and Scrutiny every 6 months.
The Task Team facilitates a range of claims fraud services, to include, but not limited to, the
following:
• Claims fraud investigation
• Claims fraud training
• Collection, recording & reporting of all OMBC claims fraud data
• Commissioning feasibility studies and fraud prevention, detection and investigation
measures, for example
• Data matching
• Use of dedicated claims fraud investigators
It is the responsibility of the Team to keep this strategy under on-going review and update and
improve it and procedures as required.
Claims Fraud Co-ordinators
Each department will have in place Claims Investigation Coordinators (CIC’s) across their
claims handling operations. These are local investigation staff who are also tasked with being
local claims fraud referral points and, they work closely with the Task Team, with internal
resources (audit, Legal) and with external agencies(solicitors, the police, national anti-fraud
agencies etc). These co-ordinators also receive information on local potential fraudulent
activity and ensure the department is fully briefed
It is the responsibility of the CIC’s to help identify fraud and to provide information where
appropriate. The CIC’s also have a key responsibility associated with the recording of OMBC
claims fraud data.
Employees
It is expected that all OMBC staff remain vigilant in respect of fraud. Any suspicion regarding
the validity of a claim should be referred in the first instance to a Claim Fraud Coordinator and
then to the Risk and Insurance Manager, the Fraud Team or Internal Audit as deemed
necessary. Any instance of serious or organized fraud, or fraud involving an employee, should
be reported to the Chief Officer immediately.
Employees are responsible for putting into effect the Council’s procedures and management
instructions.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
Employees must ensure that they avoid situations where there is a potential for a conflict of
interest.
Risk and Insurance Manager
The Risk and Insurance Manager performs two roles;
a) Liaison with other LA’s, Insurers etc in the role of facilitator for the Fraud Task Team.
b) Claims manager, with responsibility for claims made against the council (other than in
respect of housing disrepair only).
A number of key checks are applied by the RIM’s section each day, in order to identify claims
where there are discrepancies which merit further investigation. These include checks as to:
- the identity of the claimant; whether there are any previous claims or other
family claimants
- the location of the incident and any correlated claims
Further details of the procedures can be found in the Summary of Claims Fraud Procedures
(Appendix 1)
Internal Audit
Internal Audit has an integral role in the investigation of alleged fraud and corruption and in
recommending internal controls to counter it. in accordance with the requirements of the
Human Rights Act 1998. They liase with management to recommend changes in procedures to
prevent further losses to the Council. All potential frauds must be reported to the Head of
Internal Audit and recorded in a fraud register unless alternative arrangements for this have
been agreed with management.
Insurers, claims handlers, insurance solicitors
These parties play a vital role in the prevention and management of fraud, and in
ensuring that unmeritorious, frivolous, exaggerated or fraudulent claims are firmly
disposed of, whilst genuine claimants receive appropriate and timely compensation where
liability is established against the council.
All compensation claims (other than for housing disrepair/specific performance) are sent to
insurers via the Risk and Insurance Section.
Claims handlers handle claims on behalf of the insurers and are the subject of a claims handling
agreement with the council, under the terms of which they:
- receive reports from the council, and adjudicate legal liability
- handle each claim referred to them, and pay or deny the claim in accordance
with any authority levels granted to them from time to time
- receive funds from the imprest account, for the payment of claims and provide a
regular report of transactions
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
- investigate all employers liability claims and any others requiring such action,
and provide a copy of any such investigation report
- for claims above the authority level, to provide an advice on liability in respect
of such claims
- charge a fee in accordance with the type of claim handled
It is the responsibility of the claims handlers to minimize the overall payments, and for the
council to advise them of any policy issues. Where instructed for any reason (including
potential fraud) not to pay or offer without consent, reference will be made to the instructing
council before any offer is made.
From time to time, particularly for litigated cases, these claims will be referred to solicitors
who handle any litigation and advise on liability to trial.
Occasionally, claims handling will include the appointment of loss adjusters or other experts to
assist in the e.g. valuing of any claim.
5. Fraud Prevention
Claims Prevention Strategy
Chief Officers should have a claims prevention strategy aimed at avoiding the need for
compensation payments in the first place, targeted at those areas where most claims, both in
terms of number and value, are received.
This involves ensuring that the resources are available to properly investigate claims whether
from members of the public, or from employees. Departments are expected to take an active
interest in their claims, discussing and actioning reports and advice received in connection with
claims, to ensure that departmental procedures are as sound as they can be and that claims
numbers and costs are minimized.
Training may be needed for staff on claims administration, investigation and health and safety
procedures and this should be made available to all relevant employees, the provision of the
training should be documented and a record kept , with a follow up for missing employees, and
regular refresher and induction training which takes into account the main risks which the
department faces.
Service plans need to indicate risks faced by the service, and all service heads must attend risk
management training provided by the Risk and Insurance Manager, designed to help services
identify their key risks and put in place plans to manage those risks.
Official Guidance, Procedures and Internal Controls
As noted in section 4 above internal control and good practice are to be documented in the
form of procedure notes and made available to all relevant staff (perhaps via the intranet,
although this will need to be protected). It is the responsibility of managers to keep the
procedures up to date and for the task team to periodically review them for appropriateness.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
The internal controls are not just to prevent fraud but to protect individuals against malicious or
unfounded allegations of impropriety. Internal controls are the first line of defence against
fraud and it is often the case, that where fraud does occur, the controls were circumvented or
ignored.
Internal Audit will advise advise on Key controls in fraud prevention and the responsibilities
for operating the controls.
Departmental procedures must be designed to ensure compatibility with Council policies and
statutory or other regulatory obligations.
6. Deterrence
Prosecution
The Council should establish a clear Prosecution Policy that sets out exactly when a case
should be considered for proceedings, and when it should not. For example, the following
criteria should be considered:
• Compatibility with other prosecution policies within the Council
• Advice received from the Police
• Joint prosecution or investigatory work with insurers
• Financial Limits ie a limit above which the Council would consider prosecution
• Age: there may be sensitive issues in prosecuting people who are over pensionable age,
• Lack of Evidence: Proceedings should not be considered if there is any doubt in the
evidence that has been gathered. It must be clear that the fraudulent act was actually
committed
• All cases are referred to Assistant Chief Executive, Finance IT and Resources for
authorisation before any proceedings can be taken.
The crucial decision is whether a fraud has been committed, and whether there is enough
evidence to pursue it.
Disciplinary Action
Theft, fraud and corruption are serious offences against the Council and employees will face
disciplinary action or, if warranted, criminal prosecution if there is evidence that they have
been involved in these activities.
Members will face appropriate action under this strategy if they are found to have been
involved in theft, fraud or corruption against the Council in breach of the code of conduct.
Action will be taken in addition to, or instead of, criminal proceedings, depending on the
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
circumstances of each individual case, but in a consistent manner. The procedural guide
Allegations of Misconduct by Members will govern the manner in which investigations are
undertaken, and matters, if not referred to the police, will be referred to the Standards Board for
England or appropriate group leader, as appropriate. The requirements of the Local
Government Act 2000 will be applied rigorously.
Publicity
The Council’s Communications Section will optimise the publicity opportunities associated
with anti-claims fraud and corruption activity within the Council. They will also try to ensure
that the results of any action taken, including prosecutions, are reported in the media in order to
ensure that the citizens of the borough are in no doubt about the council’s intention to
prosecute where fraudulent activity is established.
In all cases where financial loss to the Council has occurred, the Council will seek to recover
the loss.
All anti-fraud and corruption activities, including the update of this strategy, will be publicised
in order to make the employees and the public aware of the Council’s commitment to taking
action on fraud and corruption when it occurs.
7. Detection
Many resources are available to the council to assist in the detection of fraud and these include:
The National Fraud Initiative
The National Anti-fraud Network
Sound investigations and administrative processes
Sound record keeping
Whistle-blowing, hotlines etc
Codes of Practice for inspection, maintenance and repair
General Procedures
The proactive checks undertaken by the Risk and Insurance section may also detect potential
frauds which have previously gone unnoticed.
Whistleblowing
The Council has a Whistleblowing policy and should consider making use of existing fraud
hotlines to track the activities of ‘claims farmers’ and others.
Data Matching
Oldham MBC recognises the very real impact that the cross matching of data can have on the
prevention and detection of certain types of fraud. And is developing standard protocols which
will facilitate data matching All such operations fully comply with the Data Protection Act,
and have been authorised by the Audit Commission. To this end the Council undertakes
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
Internal data matching and is also piloting arrangements to participate in the National Fraud
Initiative a national data matching program run by the Audit Commission.
8. Claims Fraud Response Plan & Investigation
• Where a fraudulent claim is suspected, then OMBC will take all possible and appropriate
action, to ensure that a financial loss is not suffered by the council;
• If grounds exist to repudiate or challenge a suspected fraudulent claim in whole or part
thereof, then this action will be taken;
• Where a claim can not be repudiated or challenged, whether in whole or part thereof, every
effort will be made to minimise the financial loss to the council, by settling such claims on
best possible terms;
• If a fraudulent claim has been settled and new information or evidence comes to light post-
settlement, which would indicate or demonstrate the claim to have been fraudulent and no
payment should have been made, then every effort will be made to recover such payment,
whether in whole or part thereof, from the staff member or third party;
• For instances of proven claims fraud, then the OMBC may refer matters to the police, with
a view to criminal prosecution of members of staff or third parties. Decisions whether to
refer matters to the police will be based on there being prima facie evidence of fraud,
sufficient to meet the requirements of a criminal prosecution. Where a proven fraudulent
insurance claim is being considered for referral to the police, then in the first instance, the
claim papers should be referred to the Fraud Liaison Manager and Risk and Insurance
Manager, who will determine whether this course of action is warranted and or appropriate,
based on the merits of each case. When determining this course of action, they will take
into consideration the potential risk to the reputation of the council in referring a matter to
the police, along with the handling, investigation and information gathering processes that
have applied throughout the life cycle of the claim. Once a case is considered suitable for
submission to the police, the papers should be submitted to the ACE, FITR for approval
and consideration of any consultation requirements.
From the moment a OMBC insurance claim is first identified as being potentially fraudulent,
the following will apply:
• No agreement to settle the claim in part or whole, will be communicated to the member of
staff, the third party or their representative;
• Any discussions that take place will be on a ‘without prejudice’ basis;
• The local Claims Investigation Coordinator (CIC) is to be contacted as soon as possible, for
advice and guidance, or in their absence, the Risk and Insurance Section directly;
• The claim is to be removed from the normal processing applicable for genuine claims and
external claims handlers are to be instructed ‘do not pay/offer without consent’.
Once potential frauds have been identified, departments must liaise with (as appropriate) their
CIC’s, internal audit and the risk and insurance manager to ensure that insurers are others are
fully apprised of claims where fraud is suspected.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
NB. The sooner a suspected fraudulent claim is removed from the normal process applicable
to genuine claims and a decision made whether to investigate or not, the greater the
chance of a financial loss to OMBC being prevented.
9. Claims Fraud Data Capture, Recording & Reporting
The council maintains a dedicated and secure database, for the capture, recording and reporting
on, suspected or proven fraudulent insurance and housing disrepair claims of all descriptions.
Data should be kept in the recognized format and should be subject to existing data protection
protocols and prevailing British Standards and NFI requirements.
For all suspected or proven fraudulent OMBC insurance claims, details must be relayed to the
Fraud Liaison Manager by the CIC’s and using the set reporting formats.
Departments will be expected to keep their own registers of suspected fraudsters, and should
give consideration to networking to existing central databases in order to keep up to monitor
fraud.
As noted above all potential frauds should be reported to the Head of Internal Audit, unless
otherwise agreed.
10. External Communication & Co-operation with Others
It is the role of the Fraud Liaison Manager, working in close liaison with Corporate
Communications, Legal Services, Corporate Services and the Risk and Insurance Manager, to
respond to requests or approaches, as received from external bodies, concerning OMBC claims
fraud related issues.
Such requests or approaches commonly being from the likes of the industry press,
national/local press and media.
At all times, the response to such requests or approaches by the Fraud Liaison Manager, will be
in line with the applicable agreed practices and procedures.
• The Fraud Liaison Manager maintains frequent contact with the above functions and, is the
contact for departmental CIC’s.
The Council will also set up a network of information sharing involving the following
functions; an intranet site may be dedicated for that purpose as fraudsters rarely confine their
activities to just one area.
• Benefit Investigations
• Corporate Security Services
• Trading Standards
• Debt Recovery sections
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
• Other risk task teams
• Improvement grants section
• Other Local Authorities, particularly Insurance and Risk Managers
• Insurers
• National Anti Fraud Network (NAFN)
• Greater Manchester Fraud Investigation Group (GMFIG)
• National Fraud Initiative
• Police
• External Audit
• Audit Commission
• Government Departments
• Other bodies susceptible to fraud of this nature
• National Fraud Group of ALARM
• CIPFA Better Governance Forum
• Contractors, agents, PFI partners
• Landowners
The Council is also aware of the high degree of external scrutiny of its affairs by a variety of
bodies important in highlighting any areas where improvements can be made, for example, the
Local Government Ombudsman.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
11. Fraud Awareness, Training and Creating an Anti-Fraud Culture
Oldham Council recognises that raising the level of fraud awareness amongst both its own
staff, and the general public, is an essential part of creating an anti fraud culture throughout the
authority. The overall approach is to encourage the idea that security is the responsibility of
everyone who is involved in the delivery of benefits, and will continue only if it is tolerated and
allowed to continue.
Fraud Awareness Training sessions are available for all benefits staff, and is also included as
an integral part of induction training for new staff.
To promote the high profile of fraud work, a Fraud Bulletin should be issued outlining what
has been achieved by the Investigation Team, promoting any proactive work which is being
undertaken, and encouraging staff to make referrals. This will be available electronically.
Built into the whole fraud team working procedures is a Feedback Mechanism to staff who
make referrals. Feedback is given to the Benefits Manager informing her what happened
during particular investigations, whether fraud was proven or not.
External fraud awareness is generated via overall Fraud Publicity. This includes press releases
on the work of the Investigation Team, leaflets
A training needs audit should be undertaken of staff involved in operating this strategy.
12. Resources
These should be identified
13. Quality Assurance
Procedures will be subject to on-going scrutiny by the Claims Fraud Team and subject to
periodic inspection by Internal and External audit.
14. Conclusion
The Council has always prided itself on setting and maintaining high standards and a
culture of openness, with core values of fairness, trust and value. This strategy fully
supports the Council’s desire to maintain an honest Council, free from fraud and
corruption.
The Council has in place systems and procedures to assist it in dealing with fraud and this
policy supports the Council’s desire to maintain an honest Council and safe environment
for accurate, timeley and complete processing of compensation claims which detect fraud
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
and corruption when it occurs. It is determined that these arrangements will keep pace with
future developments.
To this end, the Council will maintain a continuous review of all these systems and
procedures through its management systems, the Task Teams and through Legal and
Internal Audit.
15. Reference Point & Information
The Fraud Liaison Manager, is the focal point of reference for all OMBC claims fraud related
issues, whether of a strategic or operational nature.
In addition, there is an OMBC claims fraud site , which provides a range of claims fraud related
material, to include a ‘Claims Fraud Guide’.
Useful Contacts
Greater Manchester Fraud Initiative Group www.gmfig.org.uk
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
APPENDIX 1
COMPENSATION CLAIMS FRAUD TASK TEAM
TERMS OF REFERENCE
Purpose of the Task Team
The purpose of the Task Team is to ensure that the council manages the risk of fraud
effectively through the development of council policies and procedures which are
communicated and implemented throughout the council
Membership
- All departments
- Police
- 1st Choice Homes
- Contractors eg OCLL
The Task Team will:
- advise on the risk management implications of the risk, and the potential impact on the
council
- identify any service specific issues relating to the risk, and ensure that
o departments put in place procedures to ensure that claims are reviewed from a fraud
perspective
o that the procedures for investigating incidents and claims are adequate and that there is
a close and proper liaison between local staff investigating claims, the claims function
at the corporate centre, and the fraud section, exchequer.
o there is a proper understanding of departmental responsibilities and those of the
corporate centre
- adopt a cost-benefit approach to any proposals to manage the risk
- liaise as appropriate with internal and external resources to identify and manage risk
(including the police, health and safety and fraud agencies)
- disseminate details of the strategy/policy to relevant services and staff, identifying
appropriate responsibilities
- establish any training requirements of managers and staff with regard to implementation
- develop appropriate performance indicators and where appropriate, agree targets against
which the success of the council’s actions will be evaluated
- ensure that the strategy is implemented effectively across all services
- work with departments to assess the impact on budgets and any risk financing requirements
- identify audit requirements
By means of
- identifying and promoting initiatives and policies designed to help manage the risk
- co-ordinating information across task teams, council departments, other public and private
organisations, insurers
- sharing experience, good practice and information on risk,
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
- promoting a cost-benefit approach to the allocation and prioritisation of resources and to
initiatives designed to minimise risk
- identifying appropriate training
Outputs
- Chief Officers are aware of the problem and what they need to do to minimise the risk of
fraud within their operations
- A Claims Fraud Strategy, to conclude:
o Publicity/communications strategy
o Prosecution framework
o Data protection policy
o Partnering issues
- Guidance on best practice for dissemination throughout the council
- Where appropriate, develop and publish a council policy documents
- A 6-monthly update on work to date to the council’s Overview and Scrutiny Committee
- Identification of training needs and resources to meet those needs
- A completed fraud risk register
- Performance Indicators
Reports To (every 6 months)
- Chief Officers Management Team
- Overview and Scrutiny
Date Reviewed
8th May 2003
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
Appendix 2
PROCEEDS OF CRIME ACT (POCA)
Implemented 1.2.2003 as part of the governments Asset Recovery Strategy
Background
Powers to confiscate from convicted defendants their benefit from crime were first introduced
following the failure to recover funds in a drug trafficking case in 1978 which was a police
operation under the name Operation Julie. In this case some £750,000 of drug trafficking
proceeds were traced into the hands of the offenders and restrained. These funds had to be
released after the House of Lords held that existing powers to forfeit items used in the
commission of an offence could not be used to “strip the drug traffickers of the total profits of
their unlawful enterprises”. There was an outcry at this decision and the Government of the
day appointed Lord Justice Hodgson to review this area of the law. His committee’s report
included 48 recommendations and confiscation legislation was introduced onto the statute book
in England and Wales by the Drug Trafficking Offences Act 1986.
Although confiscation was initially only available in drug trafficking cases, it was extended by
the Criminal Justice Act 1988 to cover non-drug indictable offences and specified summary
offences.
POCA legislation is currently used primarily by the Police and HM Customs & Excise to
recover the proceeds of drug trafficking and other crimes. In addition it extends financial
investigation and confiscation powers to other investigative agencies, including Local
Authorities.
POCA created the Assets Recovery Agency (ARA) to have lead responsibility for asset
recovery in the UK. ARA will contain a Centre of Excellence, which will develop and maintain
national standards for financial investigation training. The Director of ARA will accredit a
financial investigator (FI) trained to the required standard to exercise POCA powers. Funding
is available for the training and accreditation of financial investigators to service Local
Authority needs under the new Act. Although some of the larger Authorities may have
enough work to sustain a FI of their own, it is expected that most would not. A possible
solution to this would be for a group of Authorities to network the resource of a FI between
them. This could work at group or county level and would ensure that the FI maintained the
necessary level of skill. Prospective candidates for financial investigation training will be
expected to follow the following stages:
Nomination
Nominations will be requested from Local Authorities for training in 2003.
Acceptance
ARA will assess the suitability of all candidates to undertake the training programme.
Nominations from all law enforcement agencies are evaluated in this way.
Training Programme
The training will comprise several modules. Those encompassing financial investigation,
restraint and confiscation will apply to LA candidates.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
Accreditation
In order to be accredited to use POCA powers, candidates will need to pass an assessment
included in the training programme. The form of that has yet to be decided but it may be a
written examination. Accreditation will be reviewed periodically by ARA and an inactive FI
may lose that accreditation.
Mentoring
On successful completion of the assessment, the candidate will be placed with a Mentor to
assist in the transference of the training to the workplace. Mentors are Likely to be experienced
financial investigators.
Review
All financial investigators will be reviewed periodically by ARA as part of the Agency’s
responsibility to ensure that the powers are being used appropriately and correctly.
C:\mgPageScraper\Oldham\Intranet\FINANCE AND RESOURCES\20030728\Minutes\$m5y01xau.doc
