NEST reports £1.4 million lost to fraudulent incident
The National Employment Savings Trust (NEST) has reported a £1.4 million loss due to fraud.
In its annual reports and accounts, chief executive and accounting officer Tim Jones said that it lost £1.4 million in 2012/13 from a single fraudulent attack, involving the diversion of a supplier payment.
He said: “One adverse event of significance during the year was the discovery of a criminal fraud against the organisation. We responded immediately and have strengthened our defences, although we are chastened by the experience.
“A series of actions to seek recovery of the monies, tighten our controls framework and review business processes across NEST have been undertaken.”
Jones also said that following this event, he asked NEST chairman Lawrence Churchill to remove him from consideration for any non-consolidated award for 2012/13. Churchill called the fraud a "timely reminder of the need for continuous vigilance in the modern world".
The report claimed that the attack occurred in December 2012 when a supplier bank mandate fraud was perpetrated, involving the diversion of a supplier payment. It said that it was notified of this in January 2013 and it was directed at NEST, resulting in a loss of £1,446,000 from its operating budget.
It confirmed that no money was taken from members' retirement pots but this will affect the running costs of the scheme. “As soon as we were made aware of the fraud, we ensured that all relevant regulatory authorities and the police were notified and worked closely with the Department for Work and Pensions to understand how this had happened and to independently investigate the incident,” it said.
“We also initiated steps to strengthen controls over the payment process.
A wider programme of work has since been agreed to further improve NEST systems, people and processes. As part of this, we asked Deloitte to undertake a detailed assessment of the design and operating effectiveness of key internal controls across NEST.”
It is also reviewing its fraud awareness training and has carried out additional training to appropriate staff and has put in place arrangements to identify and monitor emerging fraud risks and to address any control requirements.
“As part of this we are also enhancing our financial crime expertise within the risk team. We will also arrange regular fraud awareness training to ensure our employees are aware of this type of risk and know what action to take,” it said.
Jones said: “I am proud of what we've achieved this year – we have faced significant challenges and hurdles but have delivered for members and employers. We won't always get everything completely right, but we continue to learn and evolve our services to ensure they meet the needs of employers and members.
“The fraud loss NEST incurred represented a serious failure in our system of internal controls. We have taken rigorous and immediate action to strengthen our control environment.”