Cheque fraud and BACS

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Many businesses that Castlemead Insurance Brokers talk to are moving away from cheques due to perceived fraud issues. You may have experienced one of your cheques being changed to an alternative payee?

We have a number of examples of BACS causing a problem. We recently discovered that the Sort Code and Account number does not relate to the payee loaded onto the banks systems. We have seen a client loose a six figure sum due to a clerical fraud.

Their book keeper loaded many low value payments to realistic payees, electricity, sundry suppliers and changed the bank details to one of her nine that she had set up. The business did not become aware of the losses for two and a half years.

A supplier of ours also suffered a similar fate with their financial controller manipulating sales manager’s bonus payments to include 10% to her accounts.

Both culprits have been prosecuted, however neither has been able to pay back the money stolen. A fidelity policy would cover this issue which is something we are now regularly discussing with our clients.

As an aside professional indemnity cover suggests that it gives a fidelity cover as part of the wording, however most restrict cover to losses suffered by clients rather than losses suffered by the business itself.

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