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Social landlords can be vulnerable to fraud of many kinds and preventing it involves embedding the right culture, writes Arun Chauhan
“Fraud is a problem that undermines the stability and financial health of organisations across the economy. It is not a victimless crime and can be hugely damaging to any organisation – especially so to social housing organisations, where it often has the sort of direct, negative impact on the quality of life that is not found elsewhere,” so says the Centre of Counter Fraud Studies at the University of Portsmouth.
When it comes to fraud, housing associations are highly vulnerable. In 2018, it’s estimated that tenancy fraud cost the UK over £216m – including £55m through illegal subletting and £92m through fraudulent Right to Buy applications.
These are the most common types of fraud in housing associations:
Tenancy fraud – when a tenant breaches certain terms of their agreement or misleads a housing association to secure a tenancy. Fraud can manifest itself in various ways. Some of the most common types include:
Corporate fraud – although not exclusive to housing associations, corporate fraud commonly occurs in the social housing sector. Some of the common types include:
Preventing fraud within any business isn’t easy. It’s about finding the balance between having the right processes in place to understand your risks and identify fraud and allowing autonomy and a positive culture of information-sharing which help prevent fraud in the first instance. Here are three ways in which housing associations can mitigate the risks:
1. Whistleblowing and other counter-fraud policies
Relevant anti-fraud policies and procedures can help you to ensure any suspected instances of fraudulent activity are detected, investigated and resolved quickly.
It’s important to consider stakeholders, such as employees, tenants, local councils, suppliers and contractors when designing your anti-fraud policies. They are often on your organisation’s frontline and will frequently be the first to witness any dishonest activity.
For your policies to be effective, it’s crucial they’re well communicated with your team and stakeholders, reviewed on a regular basis – particularly as your organisation evolves – and that employees are given regular training.
2. Get your culture right
Policies on their own are insufficient. Your organisation’s culture is key in mitigating your risk of fraud. This is heavily influenced by your leaders – they set the tone for those they manage.
If your leaders get their culture right, teams will be motivated to help your organisation achieve its goals. This engagement is vital in protecting you against fraud because disenchanted employees hold little loyalty towards protecting your business.
Your team is your eyes and ears. Look after them and they’ll look after your business.
3. Promote information-sharing and best practice
Once you’ve got the right culture, promote trust and information-sharing throughout your organisation. If your employees feel comfortable around their leaders, they’re more likely to consult them when they see something that doesn’t look right. Share best practice, emphasise the importance of compliance to all employees and shareholders. Your leaders should demonstrate a rigorous attitude to compliance for employees to follow.
The impact of fraud within housing associations extends beyond financial losses. It’s also about protecting the people you strive to help. The impact of any fraud can be substantial as, ultimately, it will cause a loss of funds that result in a tenant losing the opportunity for an affordable home.
The processes and policies alone aren’t enough. It’s about getting the right culture – set by your leadership – encouraging engagement and promoting trust.
Arun Chauhan, founder and director, Tenet Compliance & Litigation; and deputy chair, Fraud Advisory Panel