Press Release

FLA RESPONSE TO THE CONSULTATION ON NEW POWERS AGAINST ORGANISED & FINANCIAL CRIME

28 Sept 2006

FLA is the principal representative of the asset, consumer and motor finance sector in the UK. FLA members achieved £85.1 billion of new business in 2005. Of this, £57.9 billion was provided to the consumer sector, and FLA members represented 25.6% of all unsecured lending in the UK. The remaining £27.2 billion was provided to the business sector and UK public services.

Our members comprise banks, subsidiaries of banks and building societies, the finance arms of leading retailers and manufacturing companies, and a range of independent firms. The facilities they provide include secured and unsecured personal loans, credit cards and store card facilities, leasing, and hire purchase.

The prevention and investigation of financial crime is something that our members and FLA itself take very seriously indeed, and something on which our members have worked collaboratively for some years. We take a leading role in the credit industry in initiating imaginative projects in this area, and we maintain a number of standing groups of members on financial crime-related issues. We are represented on the Home Office’s Identity Fraud Steering Committee and Identity Fraud Forum, on the Cross Sector Data Sharing Sub-group, and on the North West Fraud Forum.

As a trade association representing finance companies, FLA considers it appropriate to comment only on chapter 1, the chapter on data sharing.

 
1. OVERALL COMMENTS

FLA generally supports any moves towards greater data sharing to help prevent fraud and we would urge the government to find ways to overcome any vires obstacles that stand in the way of greater data sharing.

2. SPECIFIC COMMENTS

Turning to the specific questions asked in chapter 1, our answers are:

Q1: We strongly agree that public sector information on suspected fraudsters should be shared more widely within the public sector and with the private sector to prevent and detect fraud. As the consultation document points out, a recent pilot exercise, in which public sector agencies submitted data to CIFAS, showed that a high proportion of address data matched addresses already identified as suspect on the CIFAS database. This indicates that fraudsters do not limit their criminal activity to either the private sector or the public sector so, for the fight against fraud to be effective, data sharing needs to be equally cross-sector.

We agree that it is important for there to be clear rules and proper safeguards in place if public sector bodies are to move to sharing data, and we would expect these to mirror the safeguards in place in the private sector, notably (a) reference to data sharing in ‘fair processing’ notices and (b) strict rules of participation in CIFAS. Adequate controls will also be needed to ensure that anyone requesting data has the authority to receive the data. It might be helpful if organisations could use broader coverage of the Moneyweb application to check that those requesting data have the necessary status.

Given that CIFAS is already well established and very successful in helping its members to prevent fraud, we recommend that, as a minimum, CIFAS should be used as the vehicle for data sharing, at least initially. There is no reason why other fraud sharing systems should not be used either and, of course, other options could be explored in time, if considered necessary.

Q2: We have had no involvement in the National Fraud Initiative but, based on the description of its success in the consultation document, we agree that its scope should be expanded and placed on a statutory footing to increase its capacity to detect fraud. We believe that, when its findings affect the private sector, those findings should be shared with the private sector, not only the public sector.

Q3: We agree that, systems and resources permitting, SARs should be checked against appropriate databases such as those concerned with taxes, as well as the CIFAS database.

Q4: We agree that data mining can be a valuable tool in the task of uncovering fraud, and we recommend that more analysis work is carried out to identify priority areas for mining. As the consultation paper points out, any mining needs to be proportionate to the harm it is seeking to prevent and to the level of effort needed to act on its findings.

3. CONCLUSION

FLA generally supports any moves towards greater data sharing to help prevent fraud and we would urge the government to find ways to overcome any vires obstacles that stand in the way of greater data sharing.

4. FLA CONTACT DETAILS

Diane Williams
Principal Consultant, Credit & Data Policy
Diane.williams@fla.org.uk
Direct tel: 020 7420 9610 (diverts to mobile when out of office)