Source · Select Committees · Public Accounts Committee
Recommendation 13
13
The Bank told us that lenders are responsible for the Scheme’s fraud management.
Conclusion
The Bank told us that lenders are responsible for the Scheme’s fraud management. The Bank does, nevertheless, have a weekly lender fraud prevention collaboration working group, as well as conducting ‘data-analytics’ work with the Cabinet Office.32 Lenders are responsible for processing loan applications and are required to conduct counter-fraud, anti-money laundering and ‘know your customer’ checks. The Bank believes that these checks have prevented around 27,000 fraudulent loans that represent £1.1 billion, but it has no data on fraud levels among approved loans.33
Government Response
Not Addressed
HM Government
Not Addressed
3b: PAC recommendation: For the remainder of this Scheme, and future schemes, HM Treasury must better balance the interests of the taxpayer with the interests of businesses. It should demonstrate that its controls are cost effective and associated judgements reflect the appropriate balance between achieving immediate policy aims and protecting taxpayers’ money. It should start by assessing whether full reliance on self-certification is still appropriate. 3.5 The government agrees with the Committee’s recommendation. Recommendation implemented 3.6 Balancing the interests of the taxpayer with the need to support business has been a key consideration in the implementation of the Scheme. This will continue to be the case for the remainder of the Scheme’s operation and for any future support schemes. 3.7 Regarding protections against fraud, all borrowers go through Know Your Customer and Anti-Money Laundering checks. The taxpayer is protected against fraud losses which occur as a direct result of a lender failing to undertake these checks, since in such cases lenders cannot claim on the government guarantee. 3.8 Since the Scheme’s introduction, the government has taken a number of steps to safeguard taxpayers’ money within the context of the Scheme’s design. Working alongside the Bank and lenders, the government has implemented a series of measures to counter fraud. Measures include the implementation of a Credit Industry Fraud Avoidance System (Cifas) solution to prevent duplicate applications and the enlistment of National Investigation Service (NATIS) to pursue the most serious cases of fraud. The government has been clear that it will take criminal action against the most serious cases. The recoveries and collections principles issued to lenders provides further detail on managing cases of suspected fraud. 3.9 Meanwhile, the Pay as you Grow options aim to improve the affordability of loans taken out under the Scheme for those borrowers who are struggling, helping to protect jobs and support the UK’s economic recovery. 3.10 Given the ongoing impact of the pandemic and the continued need for businesses to access finance quickly, the government considers that the existing application process for the Scheme – including borrower self-certification – remains appropriate. The government will carefully consider the best approach for any future scheme.