Brokers warned to guard against fraud

Fraud investigator Haymarket Management Services is warning brokers to bolster their systems or risk being victims of organised crime.

Top of the risk list is companies failing to properly dispose of confidential papers, which are often screwed up and thrown in the bin. With criminals regularly targeting firms and trawling through their garbage such lax disposal methods leave advisers open not only to breaching the Data Protection Act but also to reputational risk from subsequent actions against their clients.

The matter is not to be taken lightly. When asked how much fraud exists in the financial services industry, George McKillop, managing director of Haymarket, says: “Honestly, nobody really knows. A lot goes undetected and much banking fraud is swept under carpet so it never becomes a statistic.”

Haymarket was set up in 1998 and is made up mainly of ex-Fraud Squad and customs professionals. It offers a range of services to either prevent, deter or investigate financial fraud.

The company says one of the simplest ways to deter criminals is to have good pre and post-employment screening.

With many large firms having a high turnover of low level staff, Haymarket says they can be vulnerable to organised crime unless proper precautions are taken.

McKillop says: “People talk of computer fraud but it’s carried out by human beings. That’s why employee screening is so important.”

The company offers something called the Tiger Attack to test how easily a company’s security can be breached. A Haymarket employee might take a job as a cleaner, for example, then hack into computers at night or commit other breaches such as targeting staff outside work or attempting to use them as plants. All of these are practices used by organised crime gangs.

McKillop adds: “Mortgage fraud is not top of the police’s list of priorities and you would have a job convincing them a fraud is taking place. We know what is needed to sell such a complaint to the police.”