Counter-fraud
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Source: BFI inspection assessment
For an explanation about how to read this radar chart see Strategic Management.
7.1 This section deals with the efforts to deter, prevent and detect fraud and to deal with it when it is detected.
Policies and procedures
7.2 Local authorities should have specific counter-fraud policies, built on the policy objectives for the Benefits service as a whole. These policies should be supported by comprehensive procedures for the Benefit Fraud team to ensure effectiveness and consistency in:
- investigations
- recovery action
- prosecutions and other alternatives.
7.3 London Borough of Harrow was not at Standard in this element because it did not :
- publicise the counter-fraud policy and strategy internally or externally
- apply consistent criteria to the application of sanctions
- have a business plan for the Investigations team.
7.4 The authority had adopted a separate counter-fraud policy and strategy incorporating a penalty and prosecution policy and had a comprehensive set of procedures for use by the Investigations team.
7.5 In our first inspection we identified that London Borough of Harrow had failed to implement a corporate anti-fraud and corruption strategy. It remedied this by adopting a corporate strategy in 2000. This is applicable to both Members and officers and follows the Nolan Principles of standards in public life. It includes a definition of fraud and corruption and sets out the responsibilities and duties of the different layers of the council.
7.6 We also recommended that the authority issued revised guidance on whistleblowing to all staff, to comply with the provisions of the Public Interest Disclosure Act. Revised guidance had been issued to all staff and the whistleblowing policy was available on the council’s intranet.
7.7 London Borough of Harrow’s counter-fraud policy and strategy was last reviewed in December 2002. This set out what the council would do to combat benefit fraud. This included:
- the adoption of national anti-fraud initiatives such as:
- Verification Framework
- closer working with Jobcentre Plus
- Do Not Redirect
- data matching.
- staff training
- independent quality checking of work
- delivery of all BFI recommendations from the first inspection.
7.8 Incorporated within this strategy is the penalty and prosecution policy, which sets out when sanctions should be applied, such as the evidential test and serving the public interest. It identified the 3 sanctions that it can apply, cautions, administrative penalties and prosecutions. However, the policy did not set out the level of overpayment which would identify when each of these sanctions would apply, with the exception of XXXX XXXX XXXX XXXX XXXX XX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX X XXXX XXXX XXXX XXXX XXXX XXXX XX
7.9 In our first report we recommended that the authority introduced an annual business plan for the work of the Investigations team. London Borough of Harrow did not have a separate business plan for the Investigations team. Targets for the number of sanctions to be achieved in 2002/03 were laid out in the service plan for Financial and Exchequer services, these were:
- 4 successful prosecutions
- one caution per month on average.
7.10 The targets for prosecutions and cautions had been met and no target had been set for the number of administrative penalties to be offered. In addition the service plan stated that 2 anti-fraud campaigns would take place with Jobcentre Plus. We were told that these would not now go ahead.
7.11 London Borough of Harrow fell just short of its target for Weekly Incorrect Benefit under the Security Against Fraud and Error scheme in 2002/03. This meant it was unable to claim additional subsidy from the Department.
7.12 The Investigations team had a comprehensive set of operational procedures which were available to all investigations staff, were consistent with the authority’s counter-fraud policy and strategy and were regularly updated to remain consistent with any legislative changes and the Department’s guidance.
7.13 To achieve Standard London Borough of Harrow should:
- communicate the counter-fraud policy and strategy to all benefits and housing staff
- promote awareness of the counter-fraud policy and strategy to all other authority staff
- define the criteria to determine what sanction is the most likely to apply if fraud is proven
- introduce a separate Investigations team business plan.
| We recommend that London Borough of Harrow: |
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Fraud referrals
7.14 Good quality fraud referrals are important because they:
- are essential to detecting and deterring fraud
- establish an authority’s reputation for rigour in claims processing
- indicate the type of fraud which may be prevalent in an area
- identify weaknesses in benefit administration systems and the remedial action necessary
- influence the allocation of fraud investigation resources
- assure management that verification processes operate to identify fraud and error effectively.
7.15 London Borough of Harrow was not at Standard in this element because it did not:
- provide benefit and housing staff with written guidance on making referrals
- deliver fraud awareness sessions to staff
- provide feedback to individual referrers
- give quarterly feedback on the outcome of investigations to benefit and housing staff
- publicise its fraud hotline
- monitor the effectiveness of fraud referrals by source
- sift referrals within 5 days of receipt.
7.16In our first report, we recommended that London Borough of Harrow introduced a new fraud referral form. The authority introduced a new referral form at the end of 2002. This fraud referral form was well designed, with signposting, and was used by the Benefit Assessors.
7.17 The fraud referral form asked the referrer for the type of fraud,
the source of evidence and a summary of the allegation. It was simple and
clear to use, but was only available to Benefit Assessors. Housing staff,
Customer Advisors and even Visiting Officers did not have access to this form.
The Assistant Benefits Manager (Investigations) told us that this was because
it had not been set up as a template on the document image processing system.
Because the standard referral form was not available referrers, other than
Benefit Assessors, used a variety of methods to make a referral including
e-mail.
7.18 In our first report we recommended that London Borough of Harrow introduced a sifting procedure. This recommendation had been implemented. Once a referral had been received it was passed to the Investigations Assistant for scoring or sifting. Depending on the score achieved the referral was passed to an Investigations Officer, overloaded, or rejected. If a referral had either JSA(IB) or IS in payment it was passed to the Department’s Counter-Fraud Investigation Service.
7.19 The sift form asked 10 questions which were weighted. We considered this approach to be over complicated and that some of the questions were subjective. For example it asked what quality of information had been received without setting any criteria and it asked how easy the investigation was likely to be. This approach could sift out some quality referrals because it was thought they might be too difficult to investigate.
7.20 There was no written guidance available for any authority employee on making a referral to the Investigations team and only Benefit Assessors and some Customer Advisors had received fraud awareness training. Other staff who may come into contact with HB and CTB customers such as housing or social services staff had not received training.
7.21 Benefit Assessors and Customer Advisors told us that they did not routinely receive feedback on referrals and if they wanted it they had to ask. In early 2002 the Investigations team introduced a newsletter that had been produced twice at the time of our on-site inspection. These newsletters detailed the work of the Investigations team and the outcome of sanctions cases. While we consider this to be a step in the right direction, there was no quarterly feedback to either benefits or housing staff on the activities and successes of the Investigations team.
7.22 London Borough of Harrow had a fraud hotline on which members of the public and staff could report incidences of suspected fraud. Callers were diverted to an answerphone if they called out of office hours. However, we could find no instance where this number was publicised on either the claim form, leaflets, Council Tax bills, or other benefit related correspondence. There were no posters in council buildings such as libraries or in the Financial and Exchequer services reception area. Staff were unaware of the fraud hotline number and when we spoke to 3 Members they were also unaware that there was a fraud hotline. The number was featured on the council’s website but was only identified as the Assistant Benefits Manager’s number.
7.23 The council did not monitor the effectiveness of referrals received by source. Shortly before we arrived on-site a new fraud case management system was introduced and the council told us that it planned to monitor referrals in the future. We looked at the information that the Investigations team provided to Scrutiny Committee between December 1999 and August 2002. This showed a broad breakdown of the source and outcome of referrals. This is shown in Figure 7.2.
| Source of referral |
Total referrals |
Number of cases investigated |
Number of cases closed |
Number of cases with an irregularity identified |
% of cases with an irregularity identified |
Sanctions |
| Benefit staff and public |
2,340 |
1,661 |
1,317 |
190 |
8 |
14* |
| Housing Benefit Matching Service |
873 |
566 |
443 |
198 |
23 |
- |
| National Fraud Initiative |
58 |
10 |
19 |
2 |
3 |
- |
| Total |
3,271 |
2,237 |
1,779 |
390 |
12 |
- |
Source: London Borough of Harrow
*5 prosecutions and 9 cautions.
7.24 With the exception of Housing Benefit Matching Service referrals, Figure 7.2 shows that only 6% of cases investigated had an irregularity identified. We considered that inadequate fraud awareness training and the lack of written guidance for referrers combined with poor quality investigations had led to these poor results. We discuss the quality of investigations later in this section of the report.
7.25 To achieve Standard in this element, London Borough of Harrow should:
· ensure that its referral form is made available to all benefit and housing staff
· simplify its referral sifting process
· provide guidance to staff on making a referral
· provide fraud awareness training to staff that are likely to come into contact with benefit customers
· feedback the results of referrals to individuals
· provide quarterly feedback on the work of the Investigations team
· publicise the existence of the fraud hotline
· monitor referrals by source to identify the most profitable sources.
| We recommend that London Borough of Harrow: |
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| We recommend that London Borough of Harrow: |
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Data matching
7.26 The Housing Benefit Matching Service is a service run by the Department. It provides an authority with the opportunity to identify discrepancies between its HB and CTB records and records for other benefits such as:
· IS and JSA(IB)
· Incapacity Benefit
· Disability Living Allowance
· Working Families’ Tax Credit.
7.27 The Audit Commission runs the National Fraud Initiative, which matches the data held by different local authorities. It provides English and Welsh local authorities with an opportunity to identify discrepancies between HB and CTB records and other records such as:
· student awards
· staff loans
· private pensions
· payrolls.
7.28 London Borough of Harrow was not at Standard in this element because it did not:
· sift data matching referrals in line with its own policies and procedures
· take action on the referrals within the Standard of 14 days
· assess matches to identify if weaknesses in benefit administration led to the error.
7.29 The authority participated in both data matching schemes. All referrals with a suspicion of fraud were investigated and the outcome of investigations were recorded and fed back to the Scrutiny Committee. It also reported the result of data matches to the Department.
7.30 The most recent Housing Benefit Matching Service exercise took place in November 2002. London Borough of Harrow received 89 referrals. At the time we were on-site in February and March 2003, none of these had been investigated. Staff told us that a lack of time and resources had prevented these cases from being looked at.
7.31 London Borough of Harrow told us that it would consider withdrawing from the Housing Benefit Matching Service because the Investigations team could not investigate the referrals in a timely manner. We pointed out that in terms of outcomes it was one of London Borough of Harrow’s most profitable sources of fraud investigation with 41% of referrals leading to a fraud being recorded as established in 2000/01.
7.32 The council received 800 referrals from the National Fraud Initiative in January 2003. These were being sifted during the on-site phase of our inspection, with 55 having been identified as requiring no further action. No investigations had yet been undertaken as a result of this exercise.
7.33 London Borough of Harrow would achieve Standard in this element if it:
· sifted data matching referrals in line with its own procedures
· took action on referrals within 14 days of their receipt
· assessed matches to identify if weaknesses in benefits administration led to the error.
| We recommend that London Borough of Harrow: |
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Do Not Redirect
7.34 Section 182A of the Social Security Administration Act 1992 allows local authorities to require providers of postal services not to redirect HB or CTB post. This can help identify possible fraudulent HB and CTB claims.
7.35 When post is unable to be delivered by Royal Mail the mail should be returned to the local authority for further investigation.
7.36 London Borough of Harrow was not at Standard in this element, because although it had operated the Do Not Redirect scheme since 1999 it did not send out all benefits post in Do Not Redirect envelopes.
7.37 The council told us that only HB cheques were sent out in the distinctive envelopes. We asked London Borough of Harrow what proportion of their payments were made by cheque and they told us that only 4% of their payments were made in this way. We were told that cost had precluded general benefits post being sent out in Do Not Redirect envelopes. We were not surprised when London Borough of Harrow told us that there had been no fraud cases arising from the Do Not Redirect scheme in the past two years. If all benefits post was sent out using this method it increases the likelihood of detecting customers who have vacated their property and asked for post to be redirected. This would result in a consequent increase in referrals.
7.38 London Borough of Harrow would achieve Standard in this element if it sent all benefits post in Do Not Redirect envelopes.
| We recommend that London Borough of Harrow: |
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Authorised individuals
7.39 Section 110A of the Social Security Administration Act 1992 provides for local authorities to authorise individuals to exercise the powers reasonably and at reasonable times under sections 109B and 109C of the Act.
7.40 The individuals so authorised have powers to:
· enter certain premises
· require a person to provide information, including the delivery of documents
· question persons on premises that have been entered under the powers.
7.41 These powers help the proper investigation of suspected fraud and error and also help in relation to issues of verification.
7.42 London Borough of Harrow was not at Standard in this element as it had failed to appoint any authorised individuals. From our work on-site we identified that the presence of an authorised individual would have helped to progress investigations. Our sampling of fraud files identified 9 cases where the investigation could have progressed further if the authority had an authorised individual. We discuss this further in Quality fraud investigations.
7.43 While we were on-site we were told that the recently appointed Senior Investigations Officer was fully accredited in Professionalism in Security and would be appointed as an authorised individual when he took up post in April 2003.
7.44 To achieve Standard in this element, London Borough of Harrow should appoint an authorised individual and monitor the use of these powers.
| We recommend that London Borough of Harrow: |
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Quality fraud investigations
7.45 It is important that investigations are focused to make best use of the resources available and that each case is thoroughly investigated.
7.46 London Borough of Harrow was not at Standard in this element because it did not:
· have a code of conduct for investigators
· commence activity within 5 working days of a referral being sifted
· keep adequate records in line with legislation.
In addition Investigations Officers did not:
· keep official notebooks
· gather sufficient evidence to support their conclusions and which was admissible to criminal standard
· interview under caution when there was suspicion of an offence.
7.47 To help us analyse London Borough of Harrow’s quality of investigations we sampled 31 closed and 9 open fraud files. From these we established that there had been considerable delays between the referral being made and the first action on the case. The average time taken was 49 days. The average time between first action and closure on the 31 closed cases was 93 days. Staff told us that the volume of referrals, staff resources and time available impacted on their ability to conduct investigations in a timely manner.
7.48 We looked in more detail at the time taken to act on referrals. From the sample of 40 cases we established that only 27% had action taken within 5 days of receiving the referral, and that nearly 47% had the first action taken on them after 60 days had elapsed. This is shown in more detail in Figure 7.3.
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Fig. 7.3: Time between referral and first action |
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| Source: BFI analysis |
7.49 We looked at the quality of the investigations in our sample of 40 cases and found:
· 3 cases which were unsuitable for investigation
· 9 cases where all avenues had not been explored and where authorised individual powers would have been appropriate
· 2 cases where an interview under caution would have been appropriate but was not carried out
· 2 cases where the case had not been decided within 14 days of the authority receiving a response to a request for further information following suspension of benefit as required by the regulations.
7.50 In addition to the above we noted that some interviews under caution had been conducted incorrectly because:
· the caution was inadequately explained
· the allegation had not been put to the customer
· an admission of guilt was not obtained from the customer before a formal caution was offered.
7.51 The fraud files we looked at were difficult to follow as many did not have fully completed logs or summary sheets, and the papers were not in date order. To establish the facts of many of the cases we had to seek answers from the Assistant Benefits Manager (Investigations). A case where we believe an interview under caution should have been carried out is shown in the case study in Figure 7.4.
Fig. 7.4: Case study 1 |
| Case Study |
| A Benefit Assessor made a referral to the Investigations team in November 2002 following a telephone call by the customer’s daughter seeking information about the claim. The caller said that her husband, the customer’s son-in-law, was the landlord. The claim had been in continuous payment since 1996. The customer was asked to attend an interview at the council offices. The customer attended the interview with her son-in-law and during the interview it transpired that the son-in-law, who had originally been a joint tenant with the customer, had purchased the property in 1999 and had continued to charge rent to the customer while remaining in the same household. The customer and the son-in-law did not speak or write good English. The customer had signed the claim forms with an ‘X’. The son-in-law who had completed the claim forms had not signed the forms and the section where it asked if the customer was related to the landlord had been left blank. Benefit Assessors had not followed up this omission when verifying the claim. Despite the limited English of the son-in-law, a statement was taken from him where he said that he had just copied out the claim forms each year. No statement was taken from the customer who was very ill. The council decided that HB had not been payable since the son-in-law had bought the property because the customer had lived in the same household as her landlord. An overpayment of £30,000 was calculated and the customer was sent an overpayment decision letter. A solicitor was engaged by the family, who wrote to London Borough of Harrow requesting an explanation of the council’s decision. The council replied saying they could not deal with him unless they had the family’s permission. BFI Comment Separate interviews under caution should have been arranged and conducted with both the customer and her landlord, with them both being given the opportunity to have an interpreter present. This would have protected the rights of the persons being interviewed and the London Borough of Harrow from accusations of failing to give the customer a fair hearing. When we asked the authority why this did not occur we were told that: XXXX XX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXX |
Source: BFI analysis
7.52 Because of our concerns over the quality of investigations we asked to look at the files of 10 cases where a sanction had been applied since April 2002. In 8 cases the customers were given a formal caution, one case had been successfully prosecuted by the police and in one case the customer had accepted an administrative penalty.
7.53 From examination of the files and by listening to the recordings of the interviews under caution we found that in 5 of the formal caution cases the customers failed to make an admission of guilt but said that they had made a mistake or did not understand their responsibilities. A formal caution can be offered in lieu of prosecution but the person must make an admission of guilt and the standard of evidence must be sufficient to withstand scrutiny in court. In addition to this:
· a husband and wife had been interviewed under caution together
· forms recommending an official caution to senior management stated that prosecutions were unlikely to succeed
· in one case where the recommendation from the Investigations Officer stated that the customer had made an error, a caution was given anyway
· incomplete summary transcripts from interviews showed that no admission had been made.
7.54 We asked London Borough of Harrow to comment on our findings. We were told that the decision to carry out a formal caution was based on the summary transcripts and conversations with Investigations Officers. The Assistant Benefits Manager (Investigations) had not listened to the tape of the interview under caution and there had been no management check. In all of these cases the Housing Benefits Manager, who delivered the caution, and who signed off the sanction recommendation sheet with the Head of Financial and Exchequer services, had not undertaken any management check. London Borough of Harrow told us that Investigations Officers were too overloaded with work to deal with the cases properly and that file checking and quality control was limited due to pressure of work.
7.55 Our concerns over the quality of investigations directed us to look at those cases that had led to a claim for Weekly Incorrect Benefit, a subsidy paid by the Department to authorities that identify fraud and error and for which an overpayment has been raised.
7.56 In 5 cases an incorrect overpayment had been calculated. These cases were part of an expired claim exercise that London Borough of Harrow had started following a recommendation made in our first report. London Borough of Harrow had visited customers whose claims had expired because they had not renewed them. When the customer did not respond, London Borough of Harrow assumed that an unnotified change of circumstances had occurred and cancelled the claim back to the beginning of the previous benefit period. This created a large overpayment, and the authority claimed a Weekly Incorrect Benefit. In its letters to the customers to justify this London Borough of Harrow quoted either:
· regulation 14 section (1) (a) of the Housing Benefit and Council Tax Benefit (Decisions and Appeals Regulation) 2001. Which states:
A person in respect of whom payment or a reduction has been suspended under regulation 11, and who subsequently fails to comply with an information requirement, shall cease to be entitled to the benefit from the date on which the payments or reduction were so suspended, or such earlier date on which entitlement to benefit ceases.
or:
· regulation 67 (1) (c) of the Housing Benefit (General) Regulations 1987 which states:
…determine that a change of circumstance has occurred which should result in the benefit period ending with an earlier week when the benefit period will end.
7.57 Neither of these regulations gives an authority the power to act in this fashion. In the first case a claim cannot be suspended if the benefit period has already ended, and in the second an authority must decide what change of circumstances has occurred before it can make a decision. London Borough of Harrow had not decided what change of circumstances had occurred in any of these cases and was therefore acting unlawfully. The authority stopped this practice immediately we brought it to their attention.
7.58 We illustrate a case where London Borough of Harrow had wrongly applied these regulations in Figure 7.5.
| Fig. 7.5: Case study 2 |
| Case Study |
| A customer was visited unsuccessfully in November 2002 after he failed to renew his claim for benefit and it expired. The Investigations team wrote to him and after 4 weeks when no reply had been received his previous claim was cancelled back to the start of the benefit period, creating an overpayment of over £10,000. The council had not established non-residency at the property His landlord, who was a housing association, had since started eviction proceedings because rent had not been paid. BFI Comment We examined the claim form and found that a community psychiatric nurse had signed it, as the customer was mentally ill. London Borough of Harrow had made no attempt to contact the nurse or to see if the customer was known to social services A letter from the National Association for Mental Health, who were acting on behalf of the customer, pointed out that the customer was in no condition to deal with his post and could not come to the door. The notes on the file stated that there had been no contact since 30 September 2001 when in fact there had been contact on 2 occasions when the customer had supplied medical certificates to the council. A telephone call received from the National Association for Mental Health had not been recorded on the document image processing system. The authority had unlawfully created a £10,000 overpayment without any serious investigation activity for a customer who was mentally ill. |
Source: BFI analysis
7.59 We recommended in our first report that investigators should use official notebooks to record and summarise their interviews and to serve as an aide memoir when in court. These are particularly useful when on visits and when talking to witnesses such as employers as the courts usually only allow investigators to refer to notes made at the time or soon after a meeting with the witness. London Borough of Harrow had not acted on this recommendation.
7.60 To achieve Standard in this element London Borough of Harrow should:
· introduce a code of conduct for investigations staff
· commence activity on referrals within 5 working days of the case being sifted
· keep adequate records and file construction on investigations
· improve the quality and quantity of evidence obtained to support logical conclusions
· interview under caution when suspicion of an offence arises
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· in cases where the legislation has not been correctly applied, adjust the overpayments that have been incorrectly calculated and notified
· use official notebooks.
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Management of investigations
7.61 Proper management of investigations:
· focuses resources on the reduction of fraud
· identifies and rectifies administrative and investigative weaknesses.
7.62 London Borough of Harrow was not at Standard in this element because it did not have a programme of management checks in place for fraud investigations and access to fraud files was not properly restricted. However, we found the following good practices:
· Investigations Officers were encouraged to seek legal advice
· the outcome of investigations was measured against the service plan
· Investigations Officers had received appropriate training
· a computerised fraud case management system was in use
· referrals were allocated to individual investigators as required by Standards.
7.63 In our first report we recommended that London Borough of Harrow introduced a management and quality checking regime for fraud investigations. In its report, published in December 2002, Internal Audit also commented on the lack of thorough checking and monitoring regimes to improve the quality of fraud work. We were concerned that the council accepted our recommendation but had not taken any action to implement it. The Assistant Benefits Manager (Investigations) told us that time and resources had prevented this from occurring. The absence of a management and quality checking regime meant that:
·investigations were not checked for compliance with legislation
· investigators’ caseloads were not monitored
· there were no key review stages where decisions were made on whether to continue with or close an investigation
· systematic guidance on the conduct of investigations was not given to individual investigators.
7.64 The results of our sampling illustrates that the absence of management checking had resulted in:
· investigations of poor quality
· high caseloads for each investigator
· cases remaining open for longer than necessary
· failure to identify cases suitable for sanction.
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7.66 To achieve Standard in this element, London Borough of Harrow should:
· introduce a quality checking regime of fraud investigations as we recommended in our first report
· ensure that access to fraud files is restricted.
| We recommend that London Borough of Harrow: |
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Training for fraud investigators
7.67 Fraud investigators should be fully trained in:
· social security legislation and all relevant regulations
· relevant legislation, such as Police and Criminal Evidence Act 1984, Criminal Procedure and Investigations Act 1996, Regulation of Investigatory Powers Act 2000, Human Rights Act 1998, Theft Act 1968
· professional standards such as Professionalism in Security
· good practice such as that contained here and in the Department’s Fraud Investigators’ Manual.
7.68 London Borough of Harrow was not at Standard in this element because investigations staff did not have specific, measurable or achievable targets.
7.69 Although the authority was not at Standard in this element, we were pleased that it had acted on the recommendation from our first inspection and all investigations staff had a formal training plan. Both Investigations Officers had received training in investigative techniques including interviewing skills, Police and Criminal Evidence Act 1984, statement taking and court appearance. Investigations Officers had also just commenced Professionalism in Security training which would lead to them becoming accredited. London Borough of Harrow performed well in the following areas:
· Investigations Officers had started to study for a professional counter-fraud qualification
· training logs were maintained
· investigators were appraised every 6 months
· investigators received Departmental circulars relating to HB and CTB within 14 days of their receipt.
7.70 Professionalism in Security training has been available free to local authorities since 2000. We asked London Borough of Harrow why the training has not been taken up earlier. Senior officers told us that the Department had insufficient places on the first course and had failed to carry the places over to the second year. However, the Department told us that they had no record of receiving any nominations for places from London Borough of Harrow for 2001/02 and 2002/03.
7.71 Investigations Officers and the Assistant Benefits Manager (Investigations) were not issued with specific measurable and achievable targets. London Borough of Harrow told us that these objectives were included in the job descriptions for each post but we could not find anything in these beyond the general duties that would be expected of such posts.
7.72 London Borough of Harrow would achieve Standard in this element if it ensured that:
· investigations staff are given specific, measurable and achievable targets.
| We recommend that London Borough of Harrow: |
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Liaison with the Counter-Fraud Investigation Service and Counter-Fraud Investigation Division Operations
7.73 A local authority’s ability to administer HB and CTB claims securely, effectively and efficiently depends on good working relationships with Jobcentre Plus, including the Counter-Fraud Investigation Service. Counter-Fraud Investigation Service is often involved with investigating persons in receipt of benefits administered by both local authorities and the Department.
7.74 London Borough of Harrow was not at Standard in this element. Although the authority had signed the Fraud Partnership Agreement with Harrow Counter-Fraud Investigation Service it did not:
· monitor performance against the Fraud Partnership Agreement
· take action as defined in the Fraud Partnership Agreement if standards were not being met
· take part in any form of joint working with Counter-Fraud Investigation Service.
7.75 In our first report we recommended that London Borough of Harrow and Counter-Fraud Investigation Service developed a programme of closer working. London Borough of Harrow had not undertaken joint investigations, interviews under caution or prosecutions with the Counter-Fraud Investigation Service. Staff told us that lack of resources prevented the authority from taking part in these.
7.76 The Assistant Benefits Manager (Investigations) told us that the authority did not receive regular responses to referrals that they had passed to the Counter-Fraud Investigation Service. We were shown a list of 25 cases dating from April 2002 to January 2003 where London Borough of Harrow had received no response to their referral. Counter-Fraud Investigation Service responded to these requests for information in February 2003. This revealed that 11 cases were under investigation, one was currently with Operational Intelligence Unit for scoring, 2 had been overloaded, one had gone to prosecution. Counter-Fraud Investigation Service said that 10 referrals had not been received.
7.77 We examined the minutes of liaison meetings and found no evidence that these problems had been discussed. We also noted that London Borough of Harrow had signed-off the certificate of performance for 2001/02 without any comments about failures in performance. The council could not explain why these problems were not raised in the meetings or at the time the certificate of performance was signed.
7.78 There was no evidence of any liaison between Counter-Fraud Investigation Service and London Borough of Harrow in our sample of cases investigated by London Borough of Harrow. These included a number of cases where either JSA(IB) or IS was in payment as well as HB and CTB. In one case where it was found that a customer had two addresses, London Borough of Harrow stopped payment of the claim but did not inform Counter-Fraud Investigation Service. We asked why and were told:
as we were in a position to end our claim we were not interested in whether they resolved their benefit.
7.79 The 2002/03 service plan for Finance and Exchequer services said that the Investigations team would take part in 2 joint exercises with the Counter-Fraud Investigation Service. At the time we were on-site in February and March 2003, no joint exercises had been taken forward. Counter-Fraud Investigation Service told us that it had 2 joint exercises planned but could not say when they would be undertaken.
7.80 The Department has established structures to improve closer working between the local authorities and the Department. Joint Regional Boards were established to set the strategic direction of fraud work in their region and to approve funding for such work. Senior officers of both the Department and local authorities attend. Joint Operational Boards are attended by fraud managers from both local authorities and the Department within operational areas, their purpose is to co-ordinate joint working and bid for funding to carry out such work. The Government has made considerable funds available for such work. London Borough of Harrow told us that it did not attend either body, and was therefore missing out on potential funding, the opportunity to work more closely with the Counter-Fraud Investigation Service and other local authorities.
7.81 London Borough of Harrow would achieve Standard in this element if it:
· monitored the Fraud Partnership Agreement with the Counter-Fraud Investigation Service
· identified opportunities for joint working
· attended the meetings of Joint Regional and Operational Boards.
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Formal cautions
7.82 In England and Wales a local authority may offer a formal caution as an alternative to prosecution as long as certain criteria are met and the case is one the local authority would wish to see in court if the caution was refused.
7.83 To be able to offer a caution the authority must have the same standard of criminal evidence required for a prosecution. A caution should only be offered if the local authority can then go on to prosecute, should the caution be refused.
7.84 London Borough of Harrow was not at Standard in this element. The council did not achieve Standard because there was no defined policy or financial criteria for when a caution would be offered. It had not met its own target in the 2002/03 service plan for the number of cautions it intended to administer.
7.85 However, it checked the Department’s database for a record of previous cautions issued and ensured that accepted cautions were registered on the Department’s database.
7.86 At the time of our on-site inspection London Borough of Harrow had carried out 10 cautions in the year to date. As reported in Quality of investigations, 5 of these formal cautions should not have been offered, as there had been either no admission of guilt or the case was unlikely to be successful in a court of law.
7.87 London Borough of Harrow would achieve Standard in this element if it:
· set criteria for offering official cautions
· set realistic targets for the number of official cautions it expected to offer in a year.
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Administrative penalties
7.88 Section 115A of the Social Security Administration Act 1992 provides local authorities with an opportunity to offer a customer an administrative penalty as an alternative to a prosecution. The penalty is 30% of the value of the overpayment.
7.89 London Borough of Harrow was not at Standard in this element because it had not set a target for the number of administrative penalties it intended to achieve, and it had no set criteria for when one should be offered as an alternative to another type of sanction. Since London Borough of Harrow had only offered one administrative penalty there was insufficient evidence to come to a conclusion concerning recovery of penalties and associated overpayments.
7.90 The one administrative penalty that the authority had issued just prior to the on-site phase of our inspection had been issued against the wrong amount. The authority had calculated the 30% penalty on an overpayment that included a non-recoverable official error and it had failed to consider underlying entitlement to benefit to reduce the overpayment.
7.91 To achieve Standard in this element, London Borough of Harrow should:
· set criteria for when it will offer an administrative penalty
· set a target for the number of administrative penalties it expects to offer in a year
· ensure that the administrative penalties that it offers have been calculated correctly.
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Prosecutions
7.92 London Borough of Harrow was not at Standard in this element as it had not:
· set criteria for when it would consider a prosecution
· set realistic targets for the number of prosecutions it expected to achieve.
7.93 London Borough of Harrow had passed one case to the police for prosecution in 2002/03. This resulted in a conviction. Between April 1999 and August 2002 the authority had achieved 5 successful prosecutions, all of which had been carried out by the police. We asked London Borough of Harrow why prosecutions were not carried out internally. Staff told us that there was insufficient resource in the legal section. However, the recent employment of a new solicitor may allow London Borough of Harrow to carry out its own prosecutions in the future.
7.94 Prosecutions can also be carried out by the Solicitor’s Branch of the Department on behalf of local authorities. London Borough of Harrow had not made use of this facility.
7.95 London Borough of Harrow would achieve Standard in this element if it:
- set criteria for when it would consider a prosecution
- set realistic targets for the number of prosecutions it intended to carry out in a year
- used a variety of sources of legal support for taking prosecutions forward.
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