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.