The National Fraud Initiative – what is it?

Origins

The National Fraud Initiative (NFI)  started in 1996 and was originally managed by the Audit Commission. It is a data-matching exercise now conducted by the Cabinet Office under powers set out in the Local Accountability and Audit Act 2014 (which also abolished the Audit Commission). Under this legislation (section 33, Schedule 9) the Cabinet Office:

  • may carry out data matching exercises for the purpose of assisting in the prevention and detection of fraud;
  • may require certain bodies to provide data for data matching exercises;
  • may accept data submissions on a voluntary basis;
  • must prescribe a scale or scales of fees for mandatory data matching exercises;
  • may charge a fee for voluntary data matching exercises; and
  • must consult mandatory participants and relevant stakeholders before prescribing the mandatory scale or scales of fees.

In broad terms, it is a bi-annual exercise that matches electronic data within and between public (e.g. local and police authorities) and private sector (e.g. housing associations) bodies with the purpose of identifying possible fraud.

Data-matching is merely the first stop however. The information obtained will be provided to the relevant participating body via the secure NFI software and it will be for them to decide what to do with it. 2018/19 matches were due to become available to participants from 31 January 2019.

Participants

Public sector bodies are required to submit data to National Fraud Initiative on a regular basis, and should follow the requirements of the Code of Data Matching Practice 2018. For example, local authorities will provide information relating to:

  • payroll
  • pensions
  • trade creditors’ payment history and trade creditors’ standing data
  • housing (current tenants) and right to buy
  • housing waiting lists
  • housing benefits (provided by the DWP)
  • council tax reduction scheme
  • council tax (required annually)
  • electoral register (required annually)
  • students eligible for a loan (provided by the SLC)
  • private supported care home residents
  • transport passes and permits (including residents’ parking, blue badges and concessionary travel)
  • licences – market trader/operator, taxi driver and personal licences to supply alcohol
  • personal budget (direct payments)

The NFI also provides additional services for the public sector and there are in all approximately 1200 participating organisations.

As for those private sector bodies choosing to participate in the NFI, and supplying certain information as a result, the Cabinet Office says this about housing associations:

Our data screening in this area can help identify tenants who:

  • have no right to reside in the UK
  • are illegally subletting houses
  • are illegally claiming benefits
  • are abusing the ‘Right to buy’ scheme
  • are making invalid applications for housing

By identifying this type of fraud, we make sure that social houses can be recovered by social landlords and given to individuals who need them.

An example of the fees chargeable to a participating private sector body, such as a housing association, can be seen in the Private Sector Fees report (July 2018).

An example of the benefits to NFI participants can be seen from one example given in the 2018 report:

Portsmouth City Council
A housing tenants to housing benefit match identified a tenant
in a property owned by Portsmouth City Council. The tenant
had however been claiming housing benefit in excess of £150
per week for a different property in a nearby authority area since January 2016. The match revealed the tenant had let the property from Portsmouth City Council in February 2013, but investigations found the tenant’s partner had been subletting the Portsmouth property for up to two years. The council sought a prosecution in October 2017 and the property was successfully recovered.

Data Protection

Data protection legislation requires NFI participants to tell individuals at the very least that their data will be processed, usually by means of privacy notices.

For example, Northampton Borough Council’s corporate privacy statement says:

This authority is required by law to protect the public funds it administers. We may share information provided to us with other bodies responsible for auditing or administering public funds, in order to prevent and detect fraud, such as national data matching exercises like the National Fraud Initiative (NFI).

Hyde Housing Association Ltd’s privacy notice can be seen here. The NFI’s privacy notice is here.

The Code of Data Matching Practice referred to above says this about data protection:

1.6. Relationship to data protection legislation and other information sharing codes
1.6.1. In addition to this Code, when participating in data matching exercises, bodies should have regard to any other relevant data or information sharing codes and guidance, including any statutory guidance from the Information Commissioner, which is available on the Information Commissioner’s website at https://ico.org.uk/
1.6.2. References to compliance with, or in accordance with, data protection legislation should be construed as compliance with current data protection legislation applicable in the UK, as defined in the Data Protection Act 2018, which includes the General Data Protection Regulation (EU) 2016/679 (GDPR).
1.6.3. The Cabinet Office will review this Code in light of changes in the law and consider, at that point, whether the Code requires further amendment and if so, the appropriate time to do so.

Housing context

In a housing context, and as seen from the Portsmouth City Council example above, the NFI can help identify possible housing fraud for local authorities and housing associations.

In previous exercises, this has led to tenancies being terminated and properties re-allocated to genuine applicants on the housing waiting list who might otherwise have stayed in expensive temporary accommodation. The NFI Report 2016-18 showed during 2016/17:

  • 58 social housing properties were recovered, assisted by using the combined Council Tax and Electoral Register data to help identify an individual’s current residence.
  • 7601 false applications which were removed from housing waiting lists (over half of which came from one authority alone). In its 2018 report there was an estimate of £3,240 per case for future losses prevented as a result of removing an applicant from council housing waiting list.
  • Over £1 million was saved in 2016/18 by rejecting right to buy applications from tenants found not to be entitled.

The Housing tenant screening can:

  • identify individuals who potentially have more than one property in their name
  • highlight individuals with no right to reside in the UK
  • ensure that tenants are only resident at one address, and aren’t claiming housing benefit for a different property
  • make sure that right-to-buy claimants qualify for the scheme

For the 2018/19 NFI exercise the housing information required can be seen here re waiting lists and here re tenants. Other data can be found here.

Tools

FRAUDHUB

FraudHub has been devised to enable public and private sector organisations to share information. The annual subscription for a housing association of 10,000 or more properties which wishes to use this service is presently £4240.

There are “local” versions of such schemes. For example, the East Sussex Counter Fraud Hub:

“…was created to use new and innovative methods to tackle fraud against local authorities throughout the rural, urban and metropolitan areas of the county. The hub is made up of representatives from Brighton and Hove City Council, Eastbourne Borough Council, East Sussex County Council, Hastings Borough Council, Lewes District Council, Rother District Council and Wealden District Council.”

The London Counter Fraud Hub, which is managed by CIPFA, is a counter fraud service, which has been developed to supply data analytics, investigations and recoveries service for London local authorities and the City of London Corporation. 

APPCHECK

 AppCheck is a service that helps a participant identify any fraud, clerical errors or inconsistencies at the point of an application (rather than wait for the NFI bi-annual exercise), with over 300 million records available to this end (including access to the Home Office’s immigration database).

The 2018 NFI report gave this example of AppCheck’s use:

City of London

The City Corporation Anti-Fraud Investigation Team, along with the Housing Allocations Team, are tasked with working across London to detect, prevent, and deter people from attempting to obtain social housing under false pretences.

As part of its commitment to supporting the NFI, and to help evolve its approach to fraud prevention, the City Corporation decided to deploy AppCheck on a trial basis to see if it could help to improve its ability to identify those applying, or who have obtained, social housing under false pretences.

The AppCheck system was easily assimilated into the teams’ existing procedures and was able to provide an additional layer of intelligence to the verification process.

Following its successful trial in combating social housing tenancy application fraud, AppCheck has been rolled out across the City Corporation in areas such as HR, housing benefits and blue badge applications.

Chris Keesing, Anti-Fraud Manager within the City of London Corporation commented on the AppCheck trial:

“The AppCheck solution was a great success and proved itself early on by allowing us to identify social housing application fraud that would have otherwise potentially not been detected. We are pleased that, owing to the success in this area, we have now been able to roll out AppCheck to other departments across the City Corporation to help us identify fraud in more front-line service areas.”

RECHECK

This is designed to enable the matching of social care payments to deceased person data in order to identify payments that are continuing in error.

Conclusion

This blog has previously reported on the NFI’s 2018 report mentioned above, and the service provides just one means for local authorities and housing associations in their detection and understanding of housing fraud and it’s extent (in global terms the Annual Fraud Indicator 2017 found that housing tenancy fraud costs local government £1.83 billion).



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