Speech by Sally Dewar, Managing Director, Wholesale, FSA
Annual Financial Crime Conference
27 April 2009
Good morning ladies and gentlemen and let me echo Philip’s warm welcome to our annual financial crime conference.
As you will be aware, financial crime has been the subject of much political debate in recent weeks both in the UK and internationally with interest from G20, de Larosi̬re, and the Sassoon Reports. Clearly we need to wait to see how these all play out Рin the meantime, whilst much has been achieved, there is still much to do, and any change should seek to build on these achievements.
Going back five years, to an economy with much more benign conditions, where there was:
Annual Financial Crime Conference
27 April 2009
Good morning ladies and gentlemen and let me echo Philip’s warm welcome to our annual financial crime conference.
As you will be aware, financial crime has been the subject of much political debate in recent weeks both in the UK and internationally with interest from G20, de Larosi̬re, and the Sassoon Reports. Clearly we need to wait to see how these all play out Рin the meantime, whilst much has been achieved, there is still much to do, and any change should seek to build on these achievements.
Going back five years, to an economy with much more benign conditions, where there was:
- No co-ordinated strategy on fraud – a framework failing to effectively bring together the wide range of stakeholders involved in tackling financial crime;
- A money laundering regime that placed heavy burdens on both firms and consumers;
- A lack of infrastructure to co-ordinate public/private sector intelligence sharing; and
- Legislation that made pursuing a criminal conviction for fraud near impossible.
5 years on and today much progress has been made:
- We now have a national strategy on fraud – through the National Fraud Strategic Authority with a clearer understanding of priorities and where we need to focus our efforts to be most effective;
- A record number of mortgage fraudsters – 40 in the last two years, have been taken out of the market and over half a million pound in fines issued;
- The FSA has secured its first ever criminal conviction for insider dealing, with several more prosecutions in the pipeline;
- We have in place a money laundering regime that is risk-based and proportionate;
- 200,000 suspicious activity reports are received by SOCA every year – information which is utilised by numerous public organisations and law enforcement agencies; and
- A simplified and more flexible Fraud Act which makes fraud easier to prosecute.
These are just some of the achievements in the last few years which have made the UK’s anti-financial crime regime much stronger. We believe that more can be done and it’s clear that it will require continued cooperation between a multitude of partners.
Today, I’d like to say a few opening remarks on the topics which you will hear more about as we go through the day. This sets out the FSA’s approach to tackling financial crime and how we can help you in the fight by focusing on four key themes, namely:
Today, I’d like to say a few opening remarks on the topics which you will hear more about as we go through the day. This sets out the FSA’s approach to tackling financial crime and how we can help you in the fight by focusing on four key themes, namely:
- Our outcomes focused, risk based approach to financial crime;
- What we see as some of the most serious financial crime risks as outlined in our Financial Risk Outlook;
- Our credible deterrence strategy; and finally
- Our programme of work to raise consumer awareness of financial crime, where today we have some very important messages to give you. This afternoon’s sessions are very much focused on the issues around consumer awareness.
Turning to the first of the key themes, I’d like to begin by outlining our regulatory approach to financial crime.
“If history teaches us one thing, it’s that history teaches us nothing”
This quote from Hegel, the German philosopher, sums up the cyclical nature of scandals that continue to rock the financial system to its very core. Barings, Worldcom and Enron through to SocGen, Satyam and Madoff today. We must learn from the past. In order to so, people must start to move away from the mindset of just doing enough to satisfy the regulators and to start thinking about the real financial crime risks to their businesses. An outcome-focused approach to financial crime means thinking about how your products, geographical locations and the culture within your organisation may create an outcome that facilitates fraudulent activity and then stopping that happening in a proportionate way. This is what we mean when we talk about ‘outcome focused’ regulation – judging firms on the outcomes and consequences of their actions not on the compliance with any given individual rule. It requires a fundamental shift in thinking that can only come from the top of the organisation, i.e. from firms’ senior management.
At the FSA we are very clear about the importance of reducing financial crime. It is one of our four statutory objectives which we are obliged by law to fulfil and it supports our other statutory objectives: to maintain confidence in the financial system and to educate, and protect consumers. Underpinning our regulatory approach is a risk-based framework, which recognises that we have a limited amount of resources and must focus our efforts on the issues which present the greatest risk to our statutory objectives.
One of the key tools in implementing this risk-based approach is our Financial Risk Outlook (or the FRO as we know it) which we publish at the beginning of every year. The aim of the FRO is to raise awareness of the main risks that we see facing firms, consumers and the regulatory system. It challenges us all to think carefully and critically about the potential threats ahead.
You probably won’t be surprised to learn that references to financial crime in this year’s FRO feature more frequently than last year. The link between declining economic conditions and crime has been well publicised. Given the unprecedented scale of the current financial crisis, the need to focus on financial crime is more relevant than ever. It presents firms with a host of new challenges around how the risks are changing and how firms’ anti-financial crime strategies need to be adapted as a consequence.
I’d like to turn then to these changing risks as we have set them out in our FRO, namely Fraud and Market Abuse.
Given current conditions, firms need to carefully consider: does my business have the capacity – both financially and reputationally – to prevent, detect or withstand a major corporate fraud?
In the last eighteen months there has been an abundance of headlines dedicated to this area, which should give us some clue as to fraud’s direction of travel:
“If history teaches us one thing, it’s that history teaches us nothing”
This quote from Hegel, the German philosopher, sums up the cyclical nature of scandals that continue to rock the financial system to its very core. Barings, Worldcom and Enron through to SocGen, Satyam and Madoff today. We must learn from the past. In order to so, people must start to move away from the mindset of just doing enough to satisfy the regulators and to start thinking about the real financial crime risks to their businesses. An outcome-focused approach to financial crime means thinking about how your products, geographical locations and the culture within your organisation may create an outcome that facilitates fraudulent activity and then stopping that happening in a proportionate way. This is what we mean when we talk about ‘outcome focused’ regulation – judging firms on the outcomes and consequences of their actions not on the compliance with any given individual rule. It requires a fundamental shift in thinking that can only come from the top of the organisation, i.e. from firms’ senior management.
At the FSA we are very clear about the importance of reducing financial crime. It is one of our four statutory objectives which we are obliged by law to fulfil and it supports our other statutory objectives: to maintain confidence in the financial system and to educate, and protect consumers. Underpinning our regulatory approach is a risk-based framework, which recognises that we have a limited amount of resources and must focus our efforts on the issues which present the greatest risk to our statutory objectives.
One of the key tools in implementing this risk-based approach is our Financial Risk Outlook (or the FRO as we know it) which we publish at the beginning of every year. The aim of the FRO is to raise awareness of the main risks that we see facing firms, consumers and the regulatory system. It challenges us all to think carefully and critically about the potential threats ahead.
You probably won’t be surprised to learn that references to financial crime in this year’s FRO feature more frequently than last year. The link between declining economic conditions and crime has been well publicised. Given the unprecedented scale of the current financial crisis, the need to focus on financial crime is more relevant than ever. It presents firms with a host of new challenges around how the risks are changing and how firms’ anti-financial crime strategies need to be adapted as a consequence.
I’d like to turn then to these changing risks as we have set them out in our FRO, namely Fraud and Market Abuse.
Given current conditions, firms need to carefully consider: does my business have the capacity – both financially and reputationally – to prevent, detect or withstand a major corporate fraud?
In the last eighteen months there has been an abundance of headlines dedicated to this area, which should give us some clue as to fraud’s direction of travel:
- The UK cards association (formerly APACS) – tell us that overall card fraud losses were up nearly 14% last year; and
- CIFAS – the UK's Fraud Prevention Service – have gathered data from their members that shows an overall 16% increase in the growth in fraud, compared to 2007.
Within these figures are some worrying trends that firms need to consider. For example, if you look at the specific types of fraud contained in the CIFAS figures there has been a 200% escalation in ‘account takeover’ fraud. This happens where a fraudster takes over a legitimate account of the victim. The increase could be down to fraudsters changing their methods because it is getting harder to obtain credit from providers. It is a clear sign of the thriving black market for stolen personal data – ID fraud costs the country £1.7 billion a year and has directly affected at least six million Britons, according to government figures.
Developments in technology have undoubtedly been fundamental in allowing innovation and growth in the financial services industry. However, those same developments are being exploited by criminals to allow easier and faster access to valuable personal data.
Online banking is one example of technology providing cost savings and convenience to consumers and the industry – the fact that over a third of the adult population now bank online is testament to this. And yet the UK Cards Association reports an alarming 132% increase in online banking fraud last year. Abuse of the financial system in this way threatens to undermine consumer confidence and so it is vital that we recognise the warning signs and take action.
You might expect current economic conditions to have reduced opportunities for fraud because of tighter lending criteria, for example and a dwindling supply of credit. However, successful application fraud continues to rise as criminals play the system by, for example, avoiding declaring adverse credit history. So we know that they don’t stand still – they constantly look to test for weak links in the chain and your business can quickly become known as an easy target for criminals if it does not keep up to speed.
In some cases we know that economic conditions have reduced opportunities for crime, for example, mortgage fraud. Tough times lead companies to scrutinise their assets and cash flow more carefully and in doing so, they will discover frauds that took place many years before, during the good times. This is what we’re seeing with mortgage fraud at the current time as a string of cases are coming to light.
Current conditions present us with a unique opportunity: to prepare for the future by tackling weak practices now and to clear up the debris of the past. The incidence may have reduced for the moment, but it’s certainly not going away. Evidence suggests that new mortgage fraud continues to be perpetrated – recently we have worked with police forces on some very troubling cases involving mortgage brokers stealing mortgage advances from their own customers. So, there is clearly more work to do in this area.
The threat of attack can come from within your business as much as it can externally. Data gathered from the CIFAS’ staff fraud database tells us that insider fraud is on the increase. In the last six months, cases of proven staff fraud reported by CIFAS’ members have increased by 40%. Interestingly, only 2% of cases are reported through staff whistleblowing channels, which raise some important questions about the anti-fraud culture within firms. By sharing this data, CIFAS members have been able to prevent suspected fraudsters from re-entering the industry. Intelligence-sharing in this way has proven benefits, so why then aren’t all firms signed up to it?
You will hear later from Dr Bernard Herden about the National Fraud Strategic Authority’s work to develop a co-ordinated strategy for tackling fraud and make the UK a more hostile place for fraudsters.
Market abuse and insider dealing are other unwanted side effects where a failure to provide the right incentives and controls can encourage employees to commit criminal acts. As I said at the start of this speech, the FSA has a specific remit for maintaining confidence in the financial system We’ve seen the destabilising effects that market abuse can have on the financial system and, far from being a victimless crime, for every person who gains as a result of market abuse, others have to lose out. Put into perspective, that’s the pensions and investment funds of all of us.
Next Professor Martin Gill will speak about how changing personal circumstances can motivate otherwise honest people to commit financial crime. Understanding the motivations and where the risks lie is a first step towards shoring up defences and we hope that this information will help firms to be alert to the risks and reinforce their defences.
Firms are clearly under pressure to generate new income streams, however, this poses a risk that firms may engage with markets that pose a higher financial crime threat. Even in the UK, failure to know exactly who you’re doing business with could lead to legal risk, for example, around financial sanctions. To help firms in meeting their obligations, today we have published on our website a report on firms’ systems and controls in relation to the sanctions regime and I would strongly encourage all firms to review the examples of good and poor practice contained within in it.
It is crucial that even in an economic downturn such as what we’re now experiencing, firms continue to focus on operational risks to their business, including financial crime. We recognise that firms are under increased pressure to rationalise and to cut costs and so the challenge for you is to demonstrate to us that you are continuing to deliver the same outcomes.
We’ll hear more from the Panel this morning on this subject, however, I would like to add one key point. It’s generally recognised that wholesale change is required at a global level to address the current issues in the financial markets and I believe that a wholesale cultural change is necessary to strengthen our industry from financial crime. A cultural change away from the view of financial crime as ‘white collar’ and ‘victimless’.
I’d like to turn to the third of my key themes in this speech, which is our commitment to deliver credible deterrence.
Our message to potential wrongdoers is clear. If they engage in financial crime then they must realise that they can, and will, be held to account for their actions. And that there will be serious consequences.
There is a collective determination within the FSA to deliver on this promise. You will have already started to see this new philosophy bear fruit – with one criminal conviction for insider dealing already this year and several others cases in the pipeline. You’ll be hearing more on this from Margaret Cole later this morning.
This is an example of the FSA delivering on our obligations where we have the lead responsibility. It is important for us that we are clear about where the boundaries lie. Our focus is on delivering credible deterrence in respect of the obligations given to us under the Financial Services & Markets Act. This means taking action in relation to market-related offences and issues relating to unauthorised activities such as share sale frauds (sometimes known as Boiler rooms).
It is important to note that we are not, and do not seek to be, the responsible agency for prosecuting financial fraud in its ‘conventional’ or wider sense. This responsibility is shared elsewhere, for example, by law enforcement and other prosecutors. When we suspect such crimes in firms that we regulate, we can and do refer them to the relevant prosecutors. Credible deterrence in this area is a shared responsibility, so where we are not in a position to take direct action to prosecute offenders we will progress our agenda through our partners, by providing intelligence and facilitating the flow of information.
It is a strategy that is delivering real and tangible benefits. In July last year Philip Robinson outlined a programme of work the FSA is undertaking to tackle mortgage fraud – a programme that recognises the breadth of stakeholders involved in tackling this issue and is founded on intelligence sharing. Since calling on firms to participate in our voluntary ‘Information from lenders’ project, to provide us with intelligence on suspect brokers and other market participants, we’ve seen a 25% increase in the number of reports provided to us. We’ve taken people out of the market and issued fines totalling over half a million pounds for direct involvement in mortgage fraud We have regular discussions with police forces to co-operate with their criminal investigations, and we refer banned mortgage brokers to them with a view to seizing their assets and convicting them.
Credible deterrence is complemented by our more intrusive supervisory strategy. It is vital for firms and for market confidence that our institutions are soundly run by individuals who can clearly demonstrate that they have the necessary skills, experience and integrity. We have already started to interview more applicants for ‘significant influence’ posts at high impact firms and we will take action against those who fail to achieve the standards we expect. Towards the end of last year, for example, we fined the MLRO of Sindicatum Holdings £17,500 for failing to adequately oversee and implement AML controls. And the fitness and propriety of owners, managers or controllers of regulated firms continues to be a key focus for us.
Turning now to my final theme today, I’d like to talk about our programme of work to raise consumer awareness of financial crime, and give you some details of a very important partnership being unveiled today.
As a result of the rapid movement of the internet into our homes, mobile phones and televisions, there have never been so many opportunities to access fraud prevention information. And yet the number of victims continues to rise.
Fraudsters are using the current economic conditions to their advantage. With interest rates at a record low, some people will be looking for investments that will give them generous returns which out perform the market. This is how ‘boiler rooms’ or ‘share sale frauds’ operate so successfully and you will hear more from Margaret on our work, domestically and internationally, to tackle this specific problem later.
There is also the example of an organised crime scheme which SOCA brought down this month which highlights some of the techniques fraudsters use. It’s a familiar one to us all – a bogus notice that ‘you’ve won the lottery’ in a foreign country that you don’t remember entering. The victims only lose small amounts of money each, twenty pounds, which is small enough not to warrant reporting it, and of course there is the embarrassment the victim feels about having to do so. It could have netted the fraudsters £35m per year – this is money that could be used to fund other crimes. So there’s a serious social cost that means action is needed. And, mindful of our ‘public understanding’ objective, we need to find ways to help people overcome their attitudes to financial crime; to find a way to communicate with them, and to encourage them to engage with the problem and with those who can help them.
You’ll hear this afternoon from Chris Pond, Director of our Financial Capability programme, about the FSA’s response to this problem and the work we are undertaking to educate consumers.
The programme aims to develop capable, confident consumers who are better equipped to take responsibility for the vast array of financial decisions facing them today. However, we only have a finite amount of resources between us and so the first step, as an evidence-based regulator, is to find out where the problem areas lie. We ran a survey of consumers prior to this conference to enable us gauge current awareness levels of financial crime and whether people feel there is enough information out there to help them avoid becoming a victim. We will publish the findings of this survey today. Our survey found that 35% of individuals targeted by share fraudsters last year were over 65. In addition, 49% of the over 65’s believe that there isn’t enough information on how to protect themselves from fraud. The statistics from the City of London Police on boiler room victims, published last week, reinforces this view. Chris will talk more about this survey and its findings this afternoon.
Criminals use increasingly sophisticated techniques to target vulnerable people and they adapt to changing conditions - some even using the recent mergers of financial firms as a hook to confuse people into giving out personal details. And it is increasingly difficult to spot a scam ‘phishing’ email from a genuine one. This means we need to get smarter about engaging with those vulnerable groups and in doing so we must widen our reach and bring relevant experts within the scope of the anti-fraud community.
In that context then I am very pleased to announce today our new partnership with Age Concern and Help the Aged, to help protect older people and to welcome Jane Vass from Age Concern with us today to share her thoughts on what more we can do to help to tackle this problem.
In closing, I’d like to summarise the key points for you take away from this speech:
Developments in technology have undoubtedly been fundamental in allowing innovation and growth in the financial services industry. However, those same developments are being exploited by criminals to allow easier and faster access to valuable personal data.
Online banking is one example of technology providing cost savings and convenience to consumers and the industry – the fact that over a third of the adult population now bank online is testament to this. And yet the UK Cards Association reports an alarming 132% increase in online banking fraud last year. Abuse of the financial system in this way threatens to undermine consumer confidence and so it is vital that we recognise the warning signs and take action.
You might expect current economic conditions to have reduced opportunities for fraud because of tighter lending criteria, for example and a dwindling supply of credit. However, successful application fraud continues to rise as criminals play the system by, for example, avoiding declaring adverse credit history. So we know that they don’t stand still – they constantly look to test for weak links in the chain and your business can quickly become known as an easy target for criminals if it does not keep up to speed.
In some cases we know that economic conditions have reduced opportunities for crime, for example, mortgage fraud. Tough times lead companies to scrutinise their assets and cash flow more carefully and in doing so, they will discover frauds that took place many years before, during the good times. This is what we’re seeing with mortgage fraud at the current time as a string of cases are coming to light.
Current conditions present us with a unique opportunity: to prepare for the future by tackling weak practices now and to clear up the debris of the past. The incidence may have reduced for the moment, but it’s certainly not going away. Evidence suggests that new mortgage fraud continues to be perpetrated – recently we have worked with police forces on some very troubling cases involving mortgage brokers stealing mortgage advances from their own customers. So, there is clearly more work to do in this area.
The threat of attack can come from within your business as much as it can externally. Data gathered from the CIFAS’ staff fraud database tells us that insider fraud is on the increase. In the last six months, cases of proven staff fraud reported by CIFAS’ members have increased by 40%. Interestingly, only 2% of cases are reported through staff whistleblowing channels, which raise some important questions about the anti-fraud culture within firms. By sharing this data, CIFAS members have been able to prevent suspected fraudsters from re-entering the industry. Intelligence-sharing in this way has proven benefits, so why then aren’t all firms signed up to it?
You will hear later from Dr Bernard Herden about the National Fraud Strategic Authority’s work to develop a co-ordinated strategy for tackling fraud and make the UK a more hostile place for fraudsters.
Market abuse and insider dealing are other unwanted side effects where a failure to provide the right incentives and controls can encourage employees to commit criminal acts. As I said at the start of this speech, the FSA has a specific remit for maintaining confidence in the financial system We’ve seen the destabilising effects that market abuse can have on the financial system and, far from being a victimless crime, for every person who gains as a result of market abuse, others have to lose out. Put into perspective, that’s the pensions and investment funds of all of us.
Next Professor Martin Gill will speak about how changing personal circumstances can motivate otherwise honest people to commit financial crime. Understanding the motivations and where the risks lie is a first step towards shoring up defences and we hope that this information will help firms to be alert to the risks and reinforce their defences.
Firms are clearly under pressure to generate new income streams, however, this poses a risk that firms may engage with markets that pose a higher financial crime threat. Even in the UK, failure to know exactly who you’re doing business with could lead to legal risk, for example, around financial sanctions. To help firms in meeting their obligations, today we have published on our website a report on firms’ systems and controls in relation to the sanctions regime and I would strongly encourage all firms to review the examples of good and poor practice contained within in it.
It is crucial that even in an economic downturn such as what we’re now experiencing, firms continue to focus on operational risks to their business, including financial crime. We recognise that firms are under increased pressure to rationalise and to cut costs and so the challenge for you is to demonstrate to us that you are continuing to deliver the same outcomes.
We’ll hear more from the Panel this morning on this subject, however, I would like to add one key point. It’s generally recognised that wholesale change is required at a global level to address the current issues in the financial markets and I believe that a wholesale cultural change is necessary to strengthen our industry from financial crime. A cultural change away from the view of financial crime as ‘white collar’ and ‘victimless’.
I’d like to turn to the third of my key themes in this speech, which is our commitment to deliver credible deterrence.
Our message to potential wrongdoers is clear. If they engage in financial crime then they must realise that they can, and will, be held to account for their actions. And that there will be serious consequences.
There is a collective determination within the FSA to deliver on this promise. You will have already started to see this new philosophy bear fruit – with one criminal conviction for insider dealing already this year and several others cases in the pipeline. You’ll be hearing more on this from Margaret Cole later this morning.
This is an example of the FSA delivering on our obligations where we have the lead responsibility. It is important for us that we are clear about where the boundaries lie. Our focus is on delivering credible deterrence in respect of the obligations given to us under the Financial Services & Markets Act. This means taking action in relation to market-related offences and issues relating to unauthorised activities such as share sale frauds (sometimes known as Boiler rooms).
It is important to note that we are not, and do not seek to be, the responsible agency for prosecuting financial fraud in its ‘conventional’ or wider sense. This responsibility is shared elsewhere, for example, by law enforcement and other prosecutors. When we suspect such crimes in firms that we regulate, we can and do refer them to the relevant prosecutors. Credible deterrence in this area is a shared responsibility, so where we are not in a position to take direct action to prosecute offenders we will progress our agenda through our partners, by providing intelligence and facilitating the flow of information.
It is a strategy that is delivering real and tangible benefits. In July last year Philip Robinson outlined a programme of work the FSA is undertaking to tackle mortgage fraud – a programme that recognises the breadth of stakeholders involved in tackling this issue and is founded on intelligence sharing. Since calling on firms to participate in our voluntary ‘Information from lenders’ project, to provide us with intelligence on suspect brokers and other market participants, we’ve seen a 25% increase in the number of reports provided to us. We’ve taken people out of the market and issued fines totalling over half a million pounds for direct involvement in mortgage fraud We have regular discussions with police forces to co-operate with their criminal investigations, and we refer banned mortgage brokers to them with a view to seizing their assets and convicting them.
Credible deterrence is complemented by our more intrusive supervisory strategy. It is vital for firms and for market confidence that our institutions are soundly run by individuals who can clearly demonstrate that they have the necessary skills, experience and integrity. We have already started to interview more applicants for ‘significant influence’ posts at high impact firms and we will take action against those who fail to achieve the standards we expect. Towards the end of last year, for example, we fined the MLRO of Sindicatum Holdings £17,500 for failing to adequately oversee and implement AML controls. And the fitness and propriety of owners, managers or controllers of regulated firms continues to be a key focus for us.
Turning now to my final theme today, I’d like to talk about our programme of work to raise consumer awareness of financial crime, and give you some details of a very important partnership being unveiled today.
As a result of the rapid movement of the internet into our homes, mobile phones and televisions, there have never been so many opportunities to access fraud prevention information. And yet the number of victims continues to rise.
Fraudsters are using the current economic conditions to their advantage. With interest rates at a record low, some people will be looking for investments that will give them generous returns which out perform the market. This is how ‘boiler rooms’ or ‘share sale frauds’ operate so successfully and you will hear more from Margaret on our work, domestically and internationally, to tackle this specific problem later.
There is also the example of an organised crime scheme which SOCA brought down this month which highlights some of the techniques fraudsters use. It’s a familiar one to us all – a bogus notice that ‘you’ve won the lottery’ in a foreign country that you don’t remember entering. The victims only lose small amounts of money each, twenty pounds, which is small enough not to warrant reporting it, and of course there is the embarrassment the victim feels about having to do so. It could have netted the fraudsters £35m per year – this is money that could be used to fund other crimes. So there’s a serious social cost that means action is needed. And, mindful of our ‘public understanding’ objective, we need to find ways to help people overcome their attitudes to financial crime; to find a way to communicate with them, and to encourage them to engage with the problem and with those who can help them.
You’ll hear this afternoon from Chris Pond, Director of our Financial Capability programme, about the FSA’s response to this problem and the work we are undertaking to educate consumers.
The programme aims to develop capable, confident consumers who are better equipped to take responsibility for the vast array of financial decisions facing them today. However, we only have a finite amount of resources between us and so the first step, as an evidence-based regulator, is to find out where the problem areas lie. We ran a survey of consumers prior to this conference to enable us gauge current awareness levels of financial crime and whether people feel there is enough information out there to help them avoid becoming a victim. We will publish the findings of this survey today. Our survey found that 35% of individuals targeted by share fraudsters last year were over 65. In addition, 49% of the over 65’s believe that there isn’t enough information on how to protect themselves from fraud. The statistics from the City of London Police on boiler room victims, published last week, reinforces this view. Chris will talk more about this survey and its findings this afternoon.
Criminals use increasingly sophisticated techniques to target vulnerable people and they adapt to changing conditions - some even using the recent mergers of financial firms as a hook to confuse people into giving out personal details. And it is increasingly difficult to spot a scam ‘phishing’ email from a genuine one. This means we need to get smarter about engaging with those vulnerable groups and in doing so we must widen our reach and bring relevant experts within the scope of the anti-fraud community.
In that context then I am very pleased to announce today our new partnership with Age Concern and Help the Aged, to help protect older people and to welcome Jane Vass from Age Concern with us today to share her thoughts on what more we can do to help to tackle this problem.
In closing, I’d like to summarise the key points for you take away from this speech:
- Financial crime continues to remain a key priority for the FSA and it should be for your firm too. It is vital that firms continue to focus on strengthening their controls around operational risks mentioned in our FRO document, including financial crime.
- We will continue to help firms, by reviewing industry practices and highlighting areas of good and poor practice so that firms can benchmark their own controls. As well as our FRO, I would encourage you to read our regular Financial Crime Newsletters and note any Financial Crime speeches we give – all available on our website.
- We will pursue our ‘credible deterrence’ agenda by taking action ourselves where we have the lead responsibility and through our key partners where we don’t.
- Partnership working and information sharing such as what we are announcing today in respect of Age Concern and Help the Aged, is key to staying one step ahead of the fraudsters and we must work more effectively together in certain areas, particularly in raising consumer awareness of financial crime.
There has been, and no doubt will continue to be, much debate about the most effective way to reduce financial crime. We shouldn’t let that distract us from the goal of working together to tackle it. Today, the priority must be for all of us involved in the fight against financial crime to exchange ideas on how we can work together more effectively and to stay one step ahead of those who would seek to defraud society. In turbulent and changing times it is crucial that we remain focused. The number and breadth of interests of the people gathered here today should give us heart that we do remain as committed as ever to achieving that goal.
We are lucky to have such high quality speakers here today. I wish you all an enjoyable and informative day.
Thank you.
We are lucky to have such high quality speakers here today. I wish you all an enjoyable and informative day.
Thank you.
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