BSI launches new code of practice to protect vulnerable customers from fraud and financial abuse

BSI, the business standards company, has launched a new code of practice that gives recommendations to organizations for protecting vulnerable customers from financial harm that might occur as a result of fraud or financial abuse.

Sponsored by NatWest, the code of practice, PAS 17271: Protecting customers from financial harm as a result of fraud or financial abuse, gives guidance on how to recognize 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 guidance in BSI’s new code of practice distinguishes between fraud – a criminal act involving deception intended to result in financial gain, such as ID theft or online scams – and financial abuse. Financial abuse is 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.

How an organization treats its customers can contribute to levels of financial harm.  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 detailed recommendations, guidance and a comprehensive checklist to organizations that want to implement change, to achieve or maintain levels of good practice. Recommendations cover organizational principles, culture and strategy.

In cases where fraud or financial abuse has already occurred, PAS 17271 gives guidance on how to help and support customers, and how to minimize future risks. Fraud and financial abuse are widespread; in 2016, there were over 1.85 million cases of financial fraud in the UK. During 2016, financial fraud losses across payment cards, remote banking and cheques totalled £768.8 million, an increase of 2% over the prior year.[1] Experts believe this is only the tip of the iceberg, with only a fraction of all fraud cases reported.[2]

The code of practice is applicable to organizations of all types and sizes operating in the UK that manages the money or other financial assets of UK consumers – in particular banks, building societies, credit card providers, credit unions, and pension providers.

Anne Hayes, Head of Governance and Resilience at 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 said: “Being victim of fraud can be devastating and sadly we are seeing the complexity and sophistication of these crimes increase. We know that it is our collective responsibility to support consumers and help prevent them from falling victim to fraud which is why we took the initiative to sponsor a BSI PAS in 2016. The BSI PAS provides the best platform to join forces with the government, other banks and industry partners to work towards a common goal.’’

Ben Wallace, Security Minister at the Home Office, said: “Protecting vulnerable people from becoming victims of fraud or financial harm is a key priority for this Government and I really welcome this new guidance which will drive best practice in this area.

“It is an excellent example of the collaborative nature of the Joint Fraud Taskforce which sees Government, law enforcement and industry working together to tackle some of the toughest fraud issues in order to protect the public, particularly those that are at a higher risk of becoming victims.

“The national Take Five to Stop Fraud campaign raises further awareness of how the public can take simple steps to protect themselves against the most common types of fraud.”

The development of Pas 17271 was sponsored by NatWest, with a steering group comprising financial institutions and consumer bodies. The broad consensus and buy-in from industry includes involvement in the development of the PAS by: Barclays; Building Societies Association; Consumer & Public Interest Network; Financial Fraud Action UK; Home Office Joint Task Force; KMB Telemarketing Ltd; Metropolitan Police; National Trading Standards; Office of the Public Guardian; Santander UK plc; Scottish Business Resilience Centre; The Co-Operative Bank plc.