However, a brief analysis of the patterns of changing submissions by the National SIRA community shines an interesting light on the evolving habits of the UK public, from the perspective of their finance and insurance applications, as they reacted to the new conditions they found themselves in.
Despite retail finance product submissions declining, business loans being submitted to National SIRA (in the form of CBILS/BBLS and traditional business finance screening) increased by a factor 400% at one point as the SIRA community used the tools at their disposal to help mitigate the risk of fraud amongst some of the various government led financial support packages being offered to protect the UK economy in the face of this unprecedented shutdown.
From an Insurance perspective as one would expect the amount of Motor Claims being submitted for review dropped by over 25% as the UK population’s ability to move around was curtailed by the lockdown conditions. However, unsurprisingly the nation still needed to have sufficient insurance cover in place for their various needs and Policy Applications submitted to SIRA for review were only marginally down (7%) on 2019 levels.
MOTOR CLAIMS SUBMITTED DROPPED BY 25%The following analysis considers the effects of the UK’s lockdown in more granular detail and reveals some interesting patterns that reflect the nature of COVID-19 as it effected people’s lives, as well as indicators of the impact of various UK government economic stimulus measures as the situation evolved.
From a fraud perspective there were some significant increases in fraudulent activity identified by SIRA members in certain types of financial product that the National SIRA community need to be wary of – which is covered in greater detail below
There was an immediate drop in credit card applications by around 40% in March, which has been maintained as the lockdown continued. As lockdown ended this gap from 2019 appeared to be narrowing to around 30%. As a result of the drop in CC applications adverse/fraudulent applications represented the same proportions, in-line with the same ratio that we have seen in 2019.
20% DECREASE IN RETAIL FINANCE APPLICATIONSRetail finance applications were trending down by around 20% prior to the lockdown reflecting the slowdown in the economy that was occurring pre-COVID. However, it seems once people were forced to spend time at home in the lockdown applications rose and increased year on year by around 12% for the 2 months of the ‘full-on’ lockdown. As movement restrictions eased throughout June/July it appears people in the UK found things other than online shopping to occupy their time and retail finance again declined back to around 20% down on 2019 levels.
The proportion of adverse or fraudulent applications remained roughly in line with previous years ratio’s
79% DECREASE IN MORTGAGE APPLICATIONSUnsurprisingly applications for mortgages fell away and reduced, by as much as 79% at one period in April, as the confidence of UK house-movers evaporated. However, it seems that the UK Government’s attempt to stimulate the market by offering the Stamp Duty holiday in June was successful, and National SIRA saw a fairly swift return to 2019 mortgage loading levels by June as confidence returned - and perhaps people took advantage of the government stimulus measures.
From an adverse/fraud perspective the ratio of applications being submitted that were deemed fraudulent remained identical to 2019 levels.
90% INCREASE IN THE RATIO OF UNSECURED LOAN APPLICATIONS FLAGGED AS FRAUDPre-lockdown Unsecured Loan SIRA submissions were trending pretty much in-line with 2019 levels slightly down by 10%). However as lockdown took hold, with the immediate panic that ensued, these fell away to reduce by around 35% through March and April. However, as the various UK stimulus measures were released and people were able to understand their own economic circumstances better it seems that volumes recovered slightly – but were still trending around 15-20% lower than 2019.
Interestingly from an adverse/fraud perspective the ratio of applications flagged as fraud during this period did increase by staggering 90%. Indicating that despite overall application volumes being down fraudsters were increasingly trying to take advantage - perhaps because of their perception of bank’s having to adapt their resources to the crisis.
25% INCREASE IN FRAUDULENT APPLICATIONS FOR CURRENT AND SAVINGS ACCOUNTSCurrent and Savings accounts being loaded to SIRA for screening took a significant increase from May onwards, with the latter period of lockdown showing volumes up by as much as 27%. Many in the UK, with significant sums in their Current Accounts, are reported to have been trying to open up new locations to deposit money, which may explain the leap in new account openings that occurred.
From a fraud perspective there was a 25% increase in applications being deemed fraudulent after screening. As we know new bank accounts are a highly effective tools for fraudsters and it seems that those with criminal intent were increasingly attempting to open up new accounts to perpetrate their various activities during this time. Wider intelligence about organised criminals trying to access various government COVID-19 loans and grants might also play into the need for crime gangs to have been increasingly active in account opening as they sought to ‘cash-out’ their gains. Which is a subject covered in further articles in Connect.
400% INCREASE IN BUSINESS LOANS BEING SCREENEDAs alluded to in the summary business loans saw a huge spike in products being screened by SIRA members as banks drew on their various resources to screen the many loans being dealt with (such as CBILS/BBLS) as UK businesses tried to manage the rapid injection of government backed loans into the UK economy. At one point in May there was a 400% spike in business loans being screened by SIRA in comparison to the previous year. From a fraud perspective there doesn’t appear to have been a significant increase in cases of applications deemed fraudulent at point of application. However, wider analysis of the various government backed loans during this time suggests that the impact of fraud in this area probably won’t become apparent until such time as loan recovery operations commence.
In terms of trend there were no major shifts in policy submission volumes to the SIRA database as the pandemic unfolded. The only significant occurrence was in the area of Motor Claims, which dropped by over 25%. Hardly surprising considering that the majority of the UK population’s opportunity to travel had been put on hold.
50% INCREASE IN RATIO OF FRAUD FOR MOTOR CLAIMSWhen it comes to assessing the fraudulent nature of these products loaded there was a 50% increase in the ratio of adverse/fraudulent Motor Claims identified albeit from a much lower volume of cases submitted for review. Adverse policies were broadly in line with 2019 levels.
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