Firms in the financial services industry “need to have a whistleblowing policy in place” to combat fraud effectively, Medius CEO, Emma Brown, has argued.
Brown, who is responsible for putting in place whistleblower policies and making sure they are effective, explained that, while every industry can be susceptible to fraud, financial services are particularly at risk due to their nature as “a lot of money is changing hands”.
To address this, Brown advised organisations to introduce a whistleblower policy to allow members of staff to come forward in a safe and welcoming environment.
“The whistleblower policy gives them an avenue to know who to speak to, know what’s safe to say, what kind of evidence to gather, and so forth,” she explained.
She additionally stressed the importance of making the whistleblowing policy closely linked to financial services.
“The policy really needs to be front and centre so that employees know what to look out for in a manner that is relevant to their industry, not just a kind of standard policy that could be applied to everything,” Brown explained.
“What employees can look out for, how you gather evidence, and who they need to tell is key in every industry, but particularly financial services.”
Importance
Brown highlighted the importance of introducing a whistleblower policy due to a gap between perception and reporting.
“What we find is that the estimated cases of fraud amongst customers that we’ve surveyed, and other kinds of external sources, are lower than actual rates that then become detected,” she explained.
“There’s a bit of a gap between how much fraud is perceived to be happening and how much is actually happening.”
Brown evidenced this by pointing to statistics which showed that 65 per cent of finance professionals within organisations are aware fraud is going on within their organisations, yet 77 per cent take no action on it.
“They just don’t really see a fit way to move forward with it, usually out of a fear of recrimination and any sort of negative consequence coming back on them,” she added.
An accepted conversation
While this is a problem, Brown suggested some steps that could be taken to address this, such as making the discussion of fraud more common.
“The important thing is to make sure to talk about fraud within the business so that people know it’s something that does happen,” she said.
“It’s not something to be scared of, or to fear that you’re going to be outcast if you report something.”
She added that, by making fraud a topic people are more comfortable to talk about within organisations and cultivating greater awareness of what to look out for, “it will help to close the gap between estimated occurrence of fraud and actual occurrence”.
“This will help more fraud to actually become detected and then reported, because they have the right avenue to go down to know who to tell and when, which is particularly helpful when you’re reporting on somebody that you work with,” she added.
