A series of funding deals between private entities and City of London Police to help fight fraud highlights the ongoing funding pressures faced by the police force, experts have said.
City of London Police received more than £13m a year for the last three years through “commercial partnerships”, according to summaries of its accounts, which, depending on the financial year, make up around seven per cent of the force’s total budget.
While some of those partnerships are with local government organisations, such as Transport for London, City of London Police has agreed a string of funding deals with companies and trade bodies over the years to finance the fight against fraud and financial crime, according to a response to a freedom of information request filed by City A.M.
The Association of British Insurers (ABI) has given just over £4m a year between 2020 and 2023 to fund the Insurance Fraud Enforcement Department, according to the response, but the trade body has been funding the unit since it was set up in 2012.
Lloyds Bank has provided roughly £400,000 a year to the force between 2020 and 2023 to support a number of initiatives aimed at tackling fraud and financial crime. Its funding, which commenced in 2018, “has supported the set-up of a new operations unit in London for the control and coordination of fraud operations,” the bank has said previously. A spokesperson for the bank confirmed the funding deal with the police.
Banking trade body UK Finance, meanwhile, has given £2.6m a year between 2020 and 2023 to support the Dedicated Card and Payment Crime Unit. UK Finance has funded the unit since it formed in 2017, but it has previously been funded by former banking industry groups since it was established in 2002.
These financing deals raise questions about whether the City of London Police, which is the national lead force for combating fraud, is receiving adequate funds.
“The fact that the private sector has felt it necessary to step in to back-fill the fraud policing budget speaks to decades of under-investment by government in tackling fraud against businesses and a piecemeal approach to funding generally,” Mike Haley, chief executive of fraud prevention service Cifas, told City A.M.
“The fact that the private sector has felt it necessary to step in to back-fill the fraud policing budget speaks to decades of under-investment by government in tackling fraud against businesses and a piecemeal approach to funding generally”
Mike Haley, chief executive of fraud prevention service Cifas
Fraud is rife in the UK, with some referring to the problem as a “fraud epidemic”. Fraud now accounts for around 40 per cent of all crimes, but only receives about one percent of police resource.
“We call on the government to fill this void by creating a proper ring-fenced national fraud policing budget in the next spending review,” Haley added.
Detective superintendent Gary Robinson, the head of funded units at City of London Police, told City A.M. that these funded units “alleviate pressure on police forces, who cannot always respond to these specific areas of criminality due to competing priorities, resourcing constraints, and technical expertise”.
Robinson said each of these units have clear governance processes in place and their “performance and priorities are scrutinised and challenged by the funder, other key stakeholders, and the management of all the funded units.”
“All of the funded units have operational independence, meaning that they are not told which cases to investigate and/or prioritise,” he added.
While almost no one is protesting the idea of the private sector working with law enforcement agencies to tackle fraud and financial crime, some have said these types of funding deals are far from ideal.
Susan Hawley, the director of campaign group Spotlight on Corruption, told City A.M. that it would be better if firms or bodies contributed to a central pot or paid a fraud levy to help minimise the potential influence they could have on a unit’s operations.
“There is always a risk when individual firms or trade associations directly fund a law enforcement unit that they could get an outsized say in how that enforcement body does its job,” Hawley said.
However, Lloyd Firth, counsel at law firm WilmerHale, said that talk of potential conflicts was likely overdone.
“Rather than any impropriety or potential conflict of interest, the arrangements reflect a broader trend towards the private sector shouldering more of the financial and legal burden for tackling financial crime in the UK,” Firth told City A.M.
“Rather than any impropriety or potential conflict of interest, the arrangements reflect a broader trend towards the private sector shouldering more of the financial and legal burden for tackling financial crime in the UK”
Lloyd Firth, counsel at law firm WilmerHale,
Mark Allen, the ABI’s head of fraud and financial crime, told City A.M. that its funding for the Insurance Fraud Enforcement Department “fully respects the fundamental police principle of operational independence”.
It is understood that one of the main reasons for setting up the insurance fraud unit was to ensure that swingeing cuts in police resources at the time didn’t lead to such fraud cases being neglected.
Funding questions aside, the ABI, UK Finance and Lloyds Bank all say that their financing has helped deliver positive outcomes.
Allen said that tackling insurance fraud was previously not part of mainstream policing, but since its inception, the unit has helped secure more than 2000 convictions.
UK Finance, similarly, also said the unit it supports holds a great track record. “The work of DCPCU disrupts the activities of criminal gangs responsible for fraud and has resulted in hundreds of arrests and convictions,” a spokesperson for the trade body said.
And it looks like these partnerships are not going away any time soon.
“Based on the success of these commercial partnerships, specifically with the criminal convictions that have resulted from insurance and banking fraud, we will continue to incorporate commercial partnerships as part of our response to crime,” City of London Police’s Robinson said.
When asked about funding the fight against fraud, a spokesperson for the Home Office pointed City A.M. towards the government’s fraud strategy that it published last summer, where it set out a goal to cut fraud by 10 per cent from 2019 levels and committed a further £100m to boost law enforcement agencies’ anti-fraud efforts.