Counter fraud policy

This policy covers:

• what is fraud
• Housing Ombudsman Service’s approach to fraud
• reporting fraud
• responsibilities
• fraud response plan

The term ‘fraud’ is commonly used to describe the use of deception to deprive, disadvantage or cause loss to another person or party. This can include theft, the misuse of funds or other resources or more complicated crimes such as false accounting and the supply of false information.

Individuals can be prosecuted under the Fraud Act 2006 if they make a false representation, fail to disclose information or abuse their position.

Some examples of fraud include false travel and subsistence claims, unauthorised changes to supplier bank accounts, sending false invoices for payment.

All fraudulent expenditure is considered to be irregular.

The 3 primary classifications of fraud:

• fraud by false representation
• fraud by failure to disclose information when there is a legal duty to do so
• fraud by abuse of position

Read more information in Home Office: fighting fraud together.

Housing Ombudsman views fraud as an extremely serious matter and is committed to the prevention of fraud and the promotion of a counter-fraud culture. Fraud is an ever-present threat and could harm both the reputation of the Service and the resources that we manage.

The Housing Ombudsman takes a multi-faceted approach with prevention, deterrence, detection, investigation and sanctions. The Housing Ombudsman will investigate all instances of actual, attempted and suspected fraud committed by staff, consultants, suppliers and other third parties and will pursue appropriate action in cases of proven fraud to recover funds and assets lost. This may include, but is not limited to, disciplinary or contractual action, civil or criminal proceedings and referral to professionalbodies as appropriate and/or legal action.

The Housing Ombudsman has a zero-risk appetite to fraud and will undertake all mandatory counter fraud processes – initial fraud impact assessments, submission of quarterly data to the Ministry of Housing, Communities & Local Government (MHCLG), compliance with the counter-fraud function standard and agreement of annual action plans and metrics.

The Housing Ombudman Service encourages employees to report actual, attempted or suspected fraud and/or other forms of illegal activity such as bribery or corruption without fear of reprisal.

Employees must report concerns about actual, attempted or suspected fraud to their manager or to the Director of Finance & Corporate Services or by completing the online whistleblowing disclosure form in line with the Whistleblowing Policy.

The Public Interest Disclosure Act 1998 protects employees who raise concerns about certain matters of public interest in good faith. Staff can obtain free independent advice from the charity Protect, and should refer to Housing Ombudsman Service’s Whistleblowing Policy.

Managing Public Money (Annex 4.9) sets the general responsibilities for public sector organisations in relation to fraud.

The Accounting Officer is responsible for establishing and maintaining a sound system of internal control that supports the achievement of departmental policies, aims and objectives. The system of internal control is designed to respond to and manage the whole range of risks that an organisation faces. The system of internal control is based on an on-going process designed to identify the principal risks, to evaluate the nature and extent of those risks and to manage them effectively.

Managing fraud risk will be seen in the context of the management of this wider range of risks.

Overall responsibility for managing the risk of fraud has been delegated to the Director of Finance & Corporate Services.

The Executive Leadership Team is responsible for:

• establishing a Counter Fraud Policy and fraud response plan commensurate with the fraud risk profile and ensuring all employees are aware of these and know what their responsibilities are in relation to combating fraud
• ensuring effective controls exist to prevent and detect fraud
• ensuring arrangements are in place for reporting fraud and that all suspected or alleged fraud is investigated
• ensuring appropriate action is taken against those who commit fraud or who are implicated in it
• taking action to recover losses
• ensuring appropriate action is taken to minimise the risk of similar frauds occurring in the future

Line managers are responsible for:

• familiarising themselves with the types of fraud that might occur within their business area
• identifying the risks of fraud
• ensuring compliance with internal controls, policies and procedures
• reporting any actual, suspected or alleged fraud to the Director of Finance and Corporate Services or by completing the online whistleblowing disclosure form in line with the Whistleblowing Policy

All employees are responsible for:

• acting with regularity and propriety in the use and management of service resources
• ensuring that Housing Ombudsman Service’s reputation and assets are protected against fraud
• conducting themselves in accordance with Housing Ombudsman Service’s policies
• adhering to The Seven Principles of Public Life - GOV.UK (Nolan Principles)
• being alert to the possibility that unusual events or transactions could be indicators of fraud
• reporting any suspicions of fraudulent activity to their manager or other nominated person
• assisting in the investigation of actual, suspected or alleged fraud, where necessary

The Housing Ombudsman has prepared a fraud response plan that provides a checklist of actions and a guide to follow in the event that fraud is uncovered or suspected. The plan forms part of Housing Ombudsman Service’s Counter Fraud Policy and is available in the annex. It covers reporting suspicions, securing evidence, preventing further losses, the investigation, recovery and disciplinary action.

All instances of fraud are recorded in a register. An annual return is submitted to the Ministry of Housing, Communities and Local Government (MHCLG) declaring any fraudulent activity that has taken place.

The following enterprise Fraud Risk Assessment looks at the Housing Ombudsman as a whole and how susceptible to fraud it may be across all its business activities

Risk owners are assigned to each of the risks above and held on the FCS risk register. The risk register will describe the keys drivers of the fraud risk and identify mitigating actions.

Full Fraud Risk Assessments (FRA) will be undertaken on the highest areas of fraud impacts as identified in the Enterprise FRA. These will be reviewed on a periodic basis (at least annual), and in particular where there are significant changes with the Housing Ombudsman systems or processes. Where a new service is introduced, then the implications of this will be reviewed to consider whether a FRA should be undertaken

1. Introduction

This Fraud Response Plan provides a checklist of actions and a guide to follow in the event that fraud is suspected. It covers:

• suspecting fraud
• reporting a suspected fraud
• the investigation process
• liaison with the Police
• initiating recovery action
• reporting

Its purpose is to define authority levels, responsibilities for action and reporting lines in the event of suspected fraud, theft or other irregularity.

2. Suspecting fraud

If you suspect that any fraudulent activity is taking place then the Housing Ombudsman Service must consider your concerns without penalising you for raising it. All employees should be able to report their concerns without fear of reprisal or victimisation and be aware of the way to do so.

The Public Interest Disclosure Act 1998 (the ‘Whistle-blowers Act’) provides appropriate protection for those who voice genuine and legitimate concerns through the proper channels. The Housing Ombudsman Service’s Whistleblowing Policy and relevant contact details are available in the e-library

A list of ‘dos and don’ts’ is set out in Annex B, but essentially:

Be discreet to ensure that:

• employees are not harmed by false accusation
• if a fraud is occurring, that the perpetrator is not forewarned such as there is no tipping off

Act quickly and carefully and follow the procedures set out in this guidance, the Counter Fraud Policy and the Whistleblowing Policy.

Do not attempt to undertake any investigation of the suspected fraud yourself as you might destroy or corrupt valuable evidence in the process. Concentrate on providing as much information as is readily available to the investigation such as names, dates, times, transactions, invoice number etc but without discussing it with colleagues or removing any documentation.

3. Reporting a suspected fraud, bribery or corruption 

Employees must report concerns about actual, attempted or suspected fraud to the Director of Finance & Corporate Services or by completing the online whistleblowing disclosure form in line with the Whistleblowing Policy.

4. Investigating the fraud, bribery or corruption

The approach to the investigation of each actual or suspected fraud will be decided by the Director of Finance & Corporate Services who will oversee the investigation. An Investigation Officer will be allocated to undertake the investigation itself, this could be anyone within the Housing Ombudsman Service at manager level or above and would be the person deemed most suitable by the Director of Finance & Corporate Services.

Suspected fraud must be investigated in an independent, open-minded and professional manner with the aim of protecting the interests of both the Housing Ombudsman Service and the suspected individual(s). Suspicion should not infer guilt.

The DFCS will seek advice from the Public Sector Fraud Authority (PSFA) or MHCLG Counter Fraud team when dealing with highly complex, novel and sensitive fraud cases, or cases that carry a high potential for reputational damage to the government.

Where a fraud has the potential to cross organisational boundaries, we will seek to identify other potential bodies and inform them appropriately.

Where fraud, bribery or corruption is reported via the whistleblowing route, the Whistleblowing policy states how this will be handled.

Removing the threat

It is important to ensure that evidence is not contaminated, lost or destroyed and this action should be taken as promptly as justified by the circumstances, consulting the Finance, Legal and People managers/leads as appropriate, and may involve:

• changing a financial procedure
• suspending payments
• moving staff to another post or suspending them to facilitate the ongoing investigation (suspension should not be regarded as disciplinary action nor should it imply guilt)
• safeguarding files and any other potential evidence

Establishing the facts

The Director of Finance & Corporate Services should be contacted immediately for advice on the most appropriate steps to take so that the threat is removed and any criminal and disciplinary proceedings can be undertaken without delay.

A record will be maintained of the investigation and all interviews will be conducted in a fair and proper manner. If there is a likelihood of later subsequent criminal action, the police will be consulted and interviews may be conducted under caution in compliance with the Police and Criminal Evidence Act (PACE), which governs the admissibility of evidence in criminal proceedings.

Reporting the findings

These will be reported to the Ombudsman, who will determine, in consultation with the Director of Finance & Corporate Services, what further action, if any, should be taken.

Criminal and disciplinary proceedings

Decisions to prosecute and start disciplinary proceedings will be judged on different criteria with different burdens of proof. Disciplinary action can be pursued even when criminal action is not. If criminal and disciplinary proceedings are pursued concurrently then care will be taken not to hamper any wider policy action (for example by alerting other parties).

Injudicious action may prejudice the rights of an individual or hamper the Housing Ombudsman's case so Legal and People services will be informed and consulted from the outset.

The Housing Ombudsman Service will normally accede to police requests to support their investigations, but Legal will be consulted before complying with any information disclosure or file release.

5. Liaison with the police

The police generally welcome early notification of suspected fraud, particularly that of a serious or complex nature. Some frauds will lend themselves to automatic reporting to the police such as theft by a third party.

Decisions to involve the police will be taken by the Director of Finance & Corporate Services. For more complex frauds the Ombudsman, following consultation with Director of Finance & Corporate Services, will decide if and when to contact the police.

All employees will co-operate fully with any police investigation that may have to take precedence over any internal investigation or disciplinary process. Wherever possible, teams will co-ordinate their enquiries to maximise the effective and efficient use of resources and information.

6. Initiating recovery action

The Housing Ombudsman Service will seek to recover losses under the Proceeds of Crime Act 2002 in all cases where a fraud has been proven, whether through court proceedings or following internal disciplinary proceedings.

Where court proceedings are being brought, Finance will be asked to provide details in support of any claim for compensation.

Where an employee is dismissed as a result of actual fraud, the Director of Finance & Corporate Services will ensure that the loss is offset against any monies due to the employee.

7. Reporting

The Investigation Officer will keep the Director of Finance & Corporate Services updated on progress and any developments. The DFCS will keep the Executive Leadership Team and ARAC chair updated as appropriate during an investigation, noting the need for sensitivity and confidentiality.

When the investigation is completed the Investigating Officer will prepare a written report for the Ombudsman, which will set out:

• the background to the investigation
• what action was taken in response to the allegations
• the conduct of the investigation
• the facts that came to light and the evidence in support
• recommendations on action against any party where the allegation was proven
• recommendations on recovery action
• recommendations and/or action for management to reduce exposure and to minimise any recurrence

As a deterrent to other employees, a brief and anonymised summary of the circumstances may be shared.

8. Communications

The Director of Finance & Corporate Services will consider whether there is a public interest into any fraud investigation, and brief the Head of Communications at the earliest appropriate opportunity, and discuss what communications can and should be made; making clear what information can be released.

9. Sharing Intelligence with other bodies

Following a fraud investigation, we will share appropriate intelligence and trends with MHCLG Counter Fraud team and identify any other bodies we should also share information with.

10. Lessons learned

Following the report to the Ombudsman, the DFCS will instigate a review to ensure that lessons learned are captured and acted upon. This will be reported to the Executive Leadership Team and ARAC as appropriate.

Any significant incident will trigger a review of the response plan.

Do

Make a note of your concerns:

• record all relevant details, such as the nature of your concern, the names of the parties you believe to be involved, details of any telephone or other conversations with names, dates, times and any witnesses
• notes do not need to be overly formal, but should be timed, signed and dated
• timeliness is important, the longer you delay writing up, the greater the chances of recollection becoming distorted

Retain any evidence you may have:

• the quality of evidence is crucial - the more direct and tangible the evidence, the better the chances of an effective investigation

Report your suspicions promptly:

• report your suspicions to the Director of Finance & Corporate Services in the first instance - if this would be inappropriate, further guidance can be found in the
  Whistleblowing Policy

Do not

Be afraid of raising your concerns:

• the Public Interest Disclosure Act provides protection for employees who raise reasonably held concerns through the appropriate channels – see the Whistleblowing
• you will not suffer discrimination or victimisation as a result of following these procedures and the matter will be treated sensitively and confidentially

Convey your concerns to anyone other than authorised persons:

• there may be a perfectly reasonable explanation for the events that give rise to your suspicion - spreading unsubstantiated concerns may harm innocent persons

Approach the person you suspect or try to investigate the matter yourself:

• there are special rules relating to the gathering of evidence for use in criminal cases - any attempt to gather evidence by persons who are unfamiliar with these rules may destroy the case