It invariably happens. Whenever there’s a downturn in the economy, the n’er-do-wells are tempted to turn to devious, and usually illegal, ways to ‘earn a living’. Theft goes up according to the trends of the moment – stealing copper cabling from railway equipment, metal road signs, manhole covers and the old perennial, lead from church roofs have all been targeted for attacks, as reported in the local media over recent years.
In the world of asset finance, it’s a less tangible process, and it’s called fraud. There are always some risks associated with providing finance. The term ‘providing finance’ itself must be a temptation to some who feel that money is sitting there just waiting to be purloined. Managing these risks is a high priority for us at Johnson Reed, particularly in difficult market conditions when certain people can be more tempted. In our case, some of the risk can be alleviated because we can use the equipment that we supply as security, but risk can never be completely removed from lending money.
The Finance & Leasing Association (FLA) is involved in the fight against financial and organised crime. Crime committed against FLA members affects both consumers and the industries that they represent. Proceeds can also be use to finance terrorist activities. Through its committee structures, the FLA looks at all areas of financial crime and related fraud, including loan fraud, ID-enabled fraud, cheque and plastic-related fraud, e-fraud, data security and money laundering.
As a commercial underwriter, Johnson Reed, along with the rest of the industry, is being encouraged by the FLA to share information on fraudulent activity in the asset finance industry, by participating in a ‘tip-off’ system. This is a move suggested by head of finance at the FLA, Julian Rose, who said that the asset finance industry and lenders in particular must show that they are fighting fraud actively. At a recent conference, he encouraged companies to share information on fraud with other institutions by alerting the FLA about any dodgy activity they come across. He said:
Often equipment financers will spot a fraudulent application because they meet the customer direct. We want to ensure that intelligence isn’t lost from the system.
Johnson Reed director, Mark Johnson, has been actively involved with this move, by attending a fraud forum with a view to putting a fraud reporting infrastructure in place at the company. He commented:
We all need to have the right procedures in place to prevent us falling foul of these very professional fraudsters.
The march goes on to increase fraud awareness in every facet of the industry, and Johnson Reed are doing their bit to help.
