Anti-fraud Policy

2. Scope

Fraud, bribery and corruption all pose a risk to our business. They can have a negative impact on services, and damage B3Living’s reputation with regulators, customers, partners and the public. B3Living therefore has a responsibility to protect its assets, reputation and the charitable and public funds received.

B3Living is committed to maintaining the highest standards of probity, openness, accountability and integrity, as set out in our values. Within this B3Living has zero tolerance to fraud, bribery and corruption in all aspects of the business and will report any events to the regulator, and if necessary, the police and/or the serious fraud office.

B3Living will support its commitment to tackling fraud by operating policies, procedures, systems and controls that ensure the opportunity for fraud is minimised.

B3Living’s approach to fraud is to:

► Promote preventative controls
► Promote detection
► Identify clear processes for investigation
► Take firm and positive action on fraudulent cases

3. Aims and objectives

3.1 Who does it apply to?

3.1.1 The prevention, detection and reporting of fraud is the responsibility of all Board and Committee Members and employees of B3Living. It applies to all employees including those who are still in their probationary period, those working on fixed-term contracts and those working on temporary contracts. It also applies to other workers, including agency staff, contractors, involved customers, partners and homeworkers who work or provide a service for B3Living.

3.1.2 These people are expected to:

► Act with integrity at all times
► Adhere to B3Living’s the appropriate Code of Conduct
► Comply with the Standing Orders & Delegated Authority and Financial Regulations
► Raise concerns immediately if any impropriety is suspected
► Undertake training as required.

3.2 What is fraud?

3.2.1 The definition of fraud used by the Serious Fraud Office is that fraud is a type of criminal activity defined as an abuse of position or false representation or prejudicing someone’s rights for personal gain. Put simply ‘fraud is an act of deception intended to cause financial or personal gain, or to cause a loss to another party’.

3.2.2 Errors are unintentional, whereas fraud is intentional and can also include omission to do something.

3.2.3 Types of Fraud. Whilst not an exhaustive list, the broad types of fraud applicable to housing associations are as follows:

► Human Resource fraud: including identity theft; creation of ‘ghost’ employees; gaining employment under false pretences; payroll fraud; abuse of position of trust for personal of financial gain; dishonestly using influence to pervert outcomes.
► Financial fraud: including expenses falsification (inflating mileage claims, entertaining friends, claiming for expenses never incurred); Procurement fraud including the creation of fictitious/ fake suppliers; falsifying/ or drawing up fictitious invoices; deliberately paying duplicate payments; changing identity and bank accounts, credit card fraud, overcharging suppliers.
► Property fraud: Property allocation and tenancy fraud, theft or misuse of assets/stock, sale of property at less than market value (this requires collusion);
► Intellectual asset fraud: theft of policies, procedures, and company ‘knowledge’. Any irregularity in the execution, handling or reporting of money transactions i.e. money laundering.
► Unauthorised use or misuse of any property, equipment or materials of B3Living or any of its subsidiaries.
► This list is not exhaustive. Appendix 1 outlines the types of frauds commonly identified by Action Fraud.

3.2.4 Criminal activity: Fraud is also a criminal offence, usually broken down into the following categories including:

► Fraud by false representation.
► Fraud by failing to disclose information.
► Fraud by abusing a position of trust.

3.2.5 Each of the above requires an action of dishonesty and intent to make a gain or cause a loss. The gain can be money or property, including intellectual property. If convicted, these offences can result in up to 14 years imprisonment, or a fine, or both.

3.2.6 Cyber fraud: Cyber Crime can result in fraud. The Computer Misuse Act of 1990 makes certain activities illegal, such as hacking into other people’s systems, misusing software, helping a person to gain access to protected files of someone else's computer or introducing malware into computer systems (viruses, trojans, spyware etc.). The Act recognised the following new offences and penalties:

3.2.7 Unauthorised access to computer material on conviction on indictment, to imprisonment for a term not exceeding two years or a fine or both

3.2.8 Unauthorised access with intent to commit or facilitate a crime on conviction or indictment, to imprisonment for a term not exceeding five years or a fine, or to both

3.2.9 Unauthorised modification of computer material on indictment, to imprisonment not exceeding ten years or a fine, or to both.

3.2.10 Making, supplying or obtaining anything which can be used in computer misuse offences on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both.

3.2.11 Computer fraud is where information technology equipment has been used to manipulate programmes or data dishonestly (for example, by altering, substituting or destroying records, or creating spurious records), or where the use of an IT system was a material factor in the perpetration of fraud. Theft or fraudulent use of computer time and resources, including unauthorised personal browsing on the internet, is included in this definition.

3.3 What to do if you suspect a fraud?

3.3.1 It is the duty of all employees to report fraud, suspicion of fraud, or the potential for fraud as soon as they become aware of it. It is the policy of B3Living to follow up and record all reported instances of alleged fraud and to take the necessary remedial action, which may include disciplinary procedures and civil or criminal proceedings. See the fraud response framework below for more detail.

3.3.2 Common signs of fraud include:

► Illogical excuses and reasons for unusual events or actions
► Senior staff involved in routine process work such as purchasing, ordering and receiving goods
► Staff evidently living beyond their means, who have access to funds or control or influence over service providers
► Staff who do not take holiday for extended periods
► Potential conflicts of interest not declared
► Staff who do not follow established policies and procedures
► Excessive number of duties (e.g. both processing and approval of the same transaction residing with the same person)
► Undue security or excluding people from available information
► Unauthorised changes to systems of working practices
► Missing documentation/incomplete records relating to financial transactions/purchase orders/credit cards

3.4 B3Living’s approach to fraud

3.4.1 B3Living is committed to ensuring that business is conducted to the highest standards of probity, openness and accountability. Consequently, B3Living adopts a ‘zero tolerance’ approach to any type of fraud.

3.4.2 As part of this commitment, B3Living shall ensure that we follow the six key principles to prevent fraud as published by the UK government1. The six guiding principles for reasonable fraud prevention procedures are:

► Top level Commitment: Senior management must foster a culture of integrity and ensure there is a clear commitment to preventing fraud. This includes setting the tone from the top and leading by example.
► Risk Assessment: Organisations should identify and assess the nature and extent of their exposure to potential internal and external fraud risks. This assessment should be regular and informed by evidence.
► Proportionate procedures: Fraud prevention procedures should be proportionate to the level of risk faced and the nature, scale and complexity of the organisation’s activities
► Due Diligence: Apply due diligence procedures to assess the integrity of persons who perform or will perform services for or on behalf of the organisation, to mitigate identified fraud risks.
► Communication (including training): Ensure that fraud prevention policies and procedures are embedded and understood throughout the organisation through effective internal and external communication, including training.
► Monitoring and Review: Organisations should monitor and review their fraud prevention procedures regularly and make improvements where necessary to ensure they remain effective.

3.4.3 By following and embedding these principles, B3Living will be able to establish a “reasonable procedure” defence under the new corporate offence within the Economic Crime and Corporate Transparency Act 2023 of failing to prevent fraud, which comes into force on 1 September 2025.

3.4.4 B3Living must maintain more detailed anti-fraud guidance and a fraud risk assessment aimed at:

► Providing clear oversight of all the key fraud risks across the business, the personnel responsible and the controls in place to manage each fraud risk.
► the creation of an anti-fraud culture
► maximum deterrence of fraud
► successful prevention of fraud which cannot be deterred
► prompt detection of fraud which cannot be prevented
► professional investigation of detected fraud.

3.4.5 B3Living also maintains systems and procedures, which incorporate efficient and effective internal controls, and internal check procedures. These include the adequate separation of duties wherever possible to ensure that the risk of error or impropriety is prevented.

3.4.6 The Executive Team is responsible for ensuring that these controls are properly maintained and are effective. The existence, appropriateness and effectiveness of these internal controls are to be independently monitored by Internal and External Auditors.

3.4.7 Pursue fraud, ensuing there are:

► effective sanctions, including appropriate legal action (civil) against people committing fraud;

• effective methods for seeking redress in respect of money defrauded.
• collaboration with law enforcement (criminal action).

3.5 Actions and sanctions in respect of fraud

3.5.1 Employees who commit fraud should be left in no doubt as to B3Living’s willingness to take legal action as appropriate and that B3Living regards fraud as gross misconduct leading to summary dismissal. The issue will be addressed within B3Living’s disciplinary policy which will lead to dismissal if there is reasonable evidence of fraud.

3.5.2 Following dismissal there might be civil action to recover losses or criminal action, which could result in fines and/or imprisonment.

3.5.3 B3Living will protect, as far as is possible, the identity of any member of staff who has volunteered information in respect of a suspected fraud e.g. under the whistleblowing policy, whether or not it proves to be accurate or capable of verification, and will take firm action, under the disciplinary procedures, against anyone victimising staff who discover and report fraud or their suspicion of fraud.

3.6 Tenancy fraud

3.6.1 Where B3Living has evidence of tenancy fraud taking legal action will be considered to recover possession of the property. This can include requesting an order for court costs, repairs and unlawful profit costs to be repaid by the tenant. In particular under the Prevention of Social Housing Fraud Act 2013, tenants who:

► Sublet, or part with possession of part or the whole of their home without consent or cease to occupy knowing that it is a breach of tenancy, can be tried in a magistrate’s court. If found guilty they could face a fine and be required to return the financial benefit they received as a result of the offence, via an unlawful profit order

► Dishonestly sublet or part with possession of part or the whole of their home or cease to occupy the property as their only or principal home, can be tried in the Magistrates or Crown Court. If found guilty they could face a fine and be issued with unlawful profit order and/or receive a custodial sentence of up to six months in a Magistrates Court and up to two -years in the Crown Court.

3.7 Fraud response framework

3.7.1 This section sets out B3Living’s response when fraud is suspected.

3.7.2 Fraud reporting: Anyone who has knowledge of any irregularity has reason to suspect that a fraud has taken place, or if it is taking place or they suspect a fraud could be taking place, should immediately speak to his/her line manager and inform them of their suspicions.

3.7.3 Alternatively, there is an independent and confidential email address for employees via the whistleblowing procedures – company.secretary@b3living.org.uk.

3.7.4 Any Board/Committee member who suspects a fraud should advise the Chair of the Board or the Chair of Audit & Risk Committee in the first instance.

3.7.5 Anyone involved in reporting a fraud, possible or actual should not discuss the matter with other colleagues either prior to or after reporting it. They should not undertake any investigatory work themselves, or confront a suspect, as this could prejudice the outcome.

3.7.6 Initial reporting: All suspected frauds should be reported to the Company Secretary, who should immediately advise the Executive Director of Finance and the Chief Executive. In the absence of the Company Secretary the report should go to the Executive Director of Finance. If the fraud, or potential fraud is considered to be significant, greater than £5k, then the Chair of Audit & Risk Committee should be advised. In the case of a potentially serious fraud the Chief Executive should take the decision on whether the case is sufficiently serious to warrant escalation to the Chair of the Board.

3.7.7 Investigation party/case conference: The Company Secretary/ Executive Director of Finance is responsible for ensuring that appropriate investigations are conducted in a confidential and sensitive manner, working closely with the relevant head of service. They will also take all the necessary steps to secure any evidence and inform the Internal Auditors.

3.7.8 Each case is unique and therefore a confidential investigation party/case conference will be called by the Company Secretary/ Executive Director of Finance as early as possible to determine a plan of action and communications plan as necessary. The case conference should only include those who need to know but is likely to include the Head of the relevant service, the Executive Director of Finance and a Human Resources representative.

3.7.9 Types of investigation: Once the initial facts have been assessed, the case conference will decide the type and level of response required, aiming to respond in a proportionate way.

3.7.10 Examples of types of response. Once the initial facts are assessed the case conference/investigation party will decide on the type and level of investigation required, in a proportionate way. Examples include:

► Investigation by a suitable employee: This will be appropriate for low level cases and usually done by someone from a different department unconnected with the fraud. Alternatively, the Company Secretary may investigate.
► Independent investigation: A minority of frauds which are either serious, complex or both may be investigated by an independent body. This may be internal or external auditors or appropriate qualified and experienced consultants. Where appropriate B3Living might employ specialist forensic auditors.
► Involvement of the police: The police will be called in to investigate where it seems reasonably clear that a crime has been committed and the magnitude is sufficient to warrant their engagement. All investigation work will be carried out with regard to the Regulation and Investigatory Powers Act 2000 and in line with the Police and Criminal Evidence Act 1984.

3.8 Treating employees fairly

3.8.1 All individuals under investigation will be told the purpose of the investigation and why they are involved. It must be emphasised that participation in any investigation and suspension from work does not imply any guilt.

3.8.2 As a matter of course B3Living will not divulge the detailed nature of the allegations as this could prejudice any investigatory work.
3.8.3 The Human Resources representative in consultation with the case conference/ investigating party must make an initial assessment and recommend whether any employees should be suspended. Any decision to suspend the staff member concerned will be authorised and made in accordance with B3Living’s Disciplinary Procedure. If there is a suspension the reason will be made clear and B3Living will make every effort to define and limit the length of any period of suspension.

3.9 Governance arrangements, reporting arrangements and obligations

3.9.1 Where fraud in excess of £5,000 is suspected the Executive Director (Finance) will notify the Chairs of the Group Board and Audit & Risk Committee, who will be further advised once the outcome of the investigation is known. They will also be notified of any fraud or theft perpetrated or attempted by a senior employee (Head of Service level and above), no matter how low its value.

3.9.2
All instances of alleged fraud, suspected otherwise, will be recorded and reported to the Audit and Risk Committee (ARC) as part of the regular fraud and bribery report. The insurers will be notified if a claim is to be made and the internal auditors will be notified via the fraud report as part of the Audit and Risk papers.

3.9.3
The RSH’s Regulatory framework requires that Registered Providers (RPs) provide accurate and timely returns to the regulator including an annual report to report any losses from fraudulent activity.

3.9.4
For all significant frauds over £25k the Regulator will be informed in a timely way. B3Living may also at its discretion report frauds or attempted frauds of less than £25k if they may impact on the reputation of the organisation. For more minor frauds the regulator will be informed through the annual fraud review, within six months of the year end. This includes reporting on:

► Both attempted and perpetrated fraud
► Action taken to investigate
► Identifying the losses and action taken to recover losses
► Action taken to consider and address control failures and/or weaknesses relating to the area in question.

3.9.5 Alongside reporting to the regulator, the NHF advises that all RPs should consider reporting directly to Action Fraud, which is the national reporting centre. If there are reasons for not reporting, then the reasons not to do so should be clearly identified. This is carried out where relevant.

3.9.6 Potential housing benefit fraud should be reported to the National Benefit fraud hotline as well as the Company Secretary and ARC.

4. Equity, diversity and inclusion

An initial Equality Impact Assessment has been carried out on this policy and there are no adverse impacts on any of the equality groups.

5. Data protection and information security

A Data Protection Impact Assessment is not required for this policy. All data is processed in line with our Data Protection Policy.

6. Customer voice

Customers have not been consulted on this policy which is based on best practice and legislation.

7. Compliance

• Computer Misuse Act 1990
• Regulation and Investigatory Powers Act 2000
• Police and Criminal Evidence Act 1984

8. Health and safety considerations

No particular considerations.

9. Linked policies, procedures and guidance

► Standing Orders and delegations for the Board and the Audit and Risk Committee
► Anti-Bribery and corruption policy
► Anti-money laundering policy
► Code of Conduct.
► Whistleblowing policy
► Disciplinary policy.

10. Responsibilities

10.1.1 The Board has overall responsibility to ensure this policy complies with all legal and ethical obligations and everyone complies with it.

10.1.2 The Company Secretary has primary and day to day responsibility for implementing this policy, monitoring its use and effectiveness, also dealing with any questions regarding its interpretation and complete regular reviews to learn from experience.

10.1.3 Managers at all levels are responsible for ensuring those that report to them are aware of and understand the training