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Financial sector given new code on abuse

Financial sector given new code on abuse

Measures to protect vulnerable customers from financial harm are being introduced, as financial fraud crimes rise. 

In 2016, there were over 1.85 million cases of financial fraud in the UK, with losses across payment cards, remote banking and cheques totalling £768.8m, an increase of 2 per cent on the previous year. However it is thought only a fraction of all fraud cases reported.

A new code will give guidance to organisations such as banks, building societies, credit card providers, credit unions, and pension providers, on how to recognise customers who might be at particular risk from fraud and financial abuse and how to assess the potential risks to the individual.

This can include those in vulnerable circumstances, either temporarily or permanently, which can affect their ability to communicate, understand, make decisions, or take actions that are in their best interests.

The British Standards Institute (BSI) has introduced the code, PAS 17271: Protecting customers from financial harm as a result of fraud or financial abuse.

Fraud is a criminal act involving deception intended to result in financial gain, such as ID theft or online scams.

Financial abuse, on the other hand, the code defines as the criminal act of controlling a person’s property, money, pension book or other valuables intended to result in the financial or personal gain of the abuser.

It is typically carried out by people in a position of trust, such as partners, relatives, friends of carers.

The premise of the measures is that how an organization treats its customers can contribute to levels of financial harm.

For example, inadequate systems and procedures that fail to identity, inform, protect and support customers can make it more likely that vulnerable customers are susceptible to fraud or financial harm.

The code of practice provides recommendations, guidance and a checklist for organizations, which the BSI hopes ‘want to implement change, to achieve or maintain levels of good practice’.

The recommendations cover organisational principles, culture and strategy. Where fraud or financial abuse has already occurred, the code gives guidance on how to help and support customers, and how to minimize future risks.

Anne Hayes, head of governance and resilience at the BSI, said: “Financial institutions have a responsibility to assist the vulnerable. Anyone can be a victim of fraud or financial abuse – but we know from experience that some people are uniquely at risk.

"Individuals with a history of financial problems; learning difficulties; those recovering from addictions; and the young are just some of the diverse types of people most susceptible.

“PAS 17271 was created to help organizations protect customers from financial harm. The bottom line is that best practice in systems and procedures can help prevent and detect fraud and financial abuse.”

David Lowe, head of fraud prevention at NatWest, which sponsored the code said: “Being victim of fraud can be devastating and sadly we are seeing the complexity and sophistication of these crimes increase.