By Sophie Baker
The financial services industry recorded one of the highest losses to fraudsters amongst UK sectors, according to data released by the National Fraud Authority (NFA).
In its Annual Fraud Indicator (AFI), the Authority found that £3.6bn was lost, only a slight decrease on 2010’s figure of £3.8bn, attributed to improved fraud prevention methods involving plastic card (£440million) and cheque fraud (£30million).
Online banking recorded an increase in fraud of 14 per cent, or £60million, mortgage fraud stood at £1bn, and insurance at £2.1bn.
Fraud losses to SMEs was a new inclusion in the AFI, recording £780million. This estimate – the first of its kind – was produced following collaboration between the NFA and the Federation of Small Businesses (FSB). It is hoped that this revelation will push innovation in the field of new fraud prevention for this sector.
Private sector fraud losses made up 31 per cent of the total annual figure, or £12bn. Individual citizens’ losses equated to ten per cent of the overall fraud figure (£4bn), covering loss from mass-marketing fraud such as share sale, lottery and advanced fee frauds, as well as newer frauds including online ticketing and rental fraud.
The public sector experienced losses of £21bn, and charity of £1.3bn.
“Victims of fraud are found in all sections of society,” commented Dr Bernard Herdan, chief executive of the NFA. “Whether it is public, private and charity sectors or as individual citizens, it is vital we join together to take action to stem the rising tide of fraud. The Annual Fraud Indicator is our blueprint. It enables us to gain a perspective and judge the scale of the problem and target our actions accordingly.”
The industry has focused on the promising decrease, albeit a small figure, in the financial services industry’s fraud numbers.
“While the financial services industry recorded one of the highest losses to fraudsters, this figure actually represents a decrease on the 2010 AFI figure,” said Duncan Ash, marketing manager, Financial Services at SAS UK. “This demonstrates that the industry is indeed moving in the right direction through improved fraud prevention methods however fraudsters are constantly modifying their approach and, as such, fraud prevention techniques can never remain static and need to evolve to stay one step ahead of the fraudsters.
“What’s more, no single approach will serve successfully to combat fraud; it will always require the right mixture of good business practices, education, prevention and detection. In particular, banks need to focus on using analytic techniques to help secure their online banking channels, in light of the 14 per cent increase in online banking fraud.
“Only a system that allows behavioural profiling and analytics across multiple delivery channels and products simultaneously, and in real-time, can adequately address many of the emerging fraud trends in the online world.”