Government must “show courage” to recover funds from its loan programs


The UK government has been urged to implement rigorous debt collection procedures and fraud investigation mechanisms to reduce the impact of immediate losses from its emergency lending programs.

Cloud-based credit management platform Know-it cited last month’s prediction of the National Audit Office that taxpayers risk losing up to £ 26bn initiatives such as the Rebound Loan Program (BBLS) and Coronavirus Business Interruption Loan Program (CBILS), due to fraudulent claims or an inability to repay the money.

Know-it said it serves as a timely reminder of the controls needed to tackle fraud, financial crime and non-payment.

He also cited Action Fraud which found 11 cases of fraudsters suspected of exploiting BBLS and CBILS.

These loans were vulnerable to exploitation, according to law firm RPC, as lenders only carried out “light checks” due to the pressure to get money to troubled businesses as quickly as possible. .

Read more: Three people arrested after being charged with rebound credit fraud

“Fraud and financial crime – issues that have come into the spotlight recently – are arguably the most pressing issues businesses have faced for many years now,” said Lynne Darcey, Founder and CEO by Know-it.

‘In 2017, even before the recent Covid-19 outbreak, fraud and financial crime cost UK businesses £ 190bn every year, with the hardest hit private sector losing around £ 140bn.

“Small and medium-sized businesses tend to fare worse because they typically operate with much lower revenue and risk more serious consequences if they fall victim to a major fraudulent incident.

“On the one hand, the next step for the government must be to show courage and put in place vigorous debt collection procedures and fraud investigation systems, mainly to reduce the impact of any loss. immediate for the British taxpayer.

“On the other hand, the operation of BBLS and CBILS loans should remind everyone, no matter if you are a government or a business, there is always a need for basic credit checks to establish the validity of. a company, its financial situation and its directors.

“If these basic checks are not carried out then any system will still be open to fraud and default and in this case it is the UK taxpayer who will suffer.”

Read more: MPs call for answers to BBB concerns about government programs

Darcey said that even after Covid-19, the problem of fraud will persist, so lenders must use technology when checking the creditworthiness of their borrowers.

“We understand that many do not have the resources available to continuously check their customers’ credit status and perform due diligence,” said Darcey.

“This is where technology plays a vital role.

“For example, by using technology to automate the credit screening process, it can help businesses streamline that process so that they can check and monitor creditworthiness and perform due diligence, all from one. place.

“By automating this process, businesses can bring information together and identify areas of concern, without spending huge amounts of time and valuable resources, which ultimately helps them mitigate risk and reduce fraud.

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