Understanding Failure to Prevent Fraud (FTPF) in Financial Services for Managers

Your questions, answered

Fraud Prevention

Failure to Prevent Fraud

FCA Handbook

Fraud Prevention Failure to Prevent Fraud FCA Handbook

How can I ensure employees are aware of our Fraud Prevention policies and procedures? 

Our Policy Hub makes it easy to distribute your Fraud Prevention policies to all employees and track their acknowledgement. You can set up automated reminders to ensure that employees review and agree to comply with these policies, providing a clear record of engagement to support compliance.

How can employees report suspicions of fraud anonymously?

Our Whistleblowing Register provides a secure and anonymous platform for employees to report any suspicions of fraud. This tool ensures that employees can raise concerns without fear of retaliation, allowing your organisation to address potential issues promptly and transparently.

How can I make sure every employee has read and agreed to our anti-fraud and conduct policies?

Our Policy management ensures employees review and acknowledge key anti-fraud and conduct policies, creating a clear audit trail for regulators. You can manage policy updates, track completions, and demonstrate compliance—all from one place.

How can I measure my employees’ awareness of fraud risks and identify gaps in understanding?

Our Fraud Prevention Staff Survey helps you gauge staff awareness of fraud risks and pinpoint areas that need attention before issues arise. You can run periodic surveys to monitor culture, track improvements over time, and target further training.

How can I provide employees with a safe and anonymous way to report suspected fraud?

Our Whistleblowing Register gives employees a confidential channel to report potential fraud without fear of retaliation. This demonstrates to regulators that you take whistleblower protections seriously and encourages a culture of transparency.

What are the most common types of fraud in construction?

• Bid rigging and collusion during tendering
• False invoicing and overbilling
• Theft or misuse of materials and equipment
• Manipulation of progress reports or timesheets
• Warranty or insurance fraud after project completion

Why is the construction industry especially vulnerable to fraud?

The industry’s structure makes it a target. Projects often involve multiple subcontractors, large sums of money, and tight deadlines, all of which create opportunities for misconduct. Oversight can be challenging, particularly when work happens across several sites, making fraudulent activities harder to detect.

How can companies detect fraud early?

Early detection is about combining good oversight with smart tools. For example:

• Monitoring financial records for irregular billing.
• Using data analytics to flag suspicious payment patterns.
• Carrying out site inspections and inventory checks.
• Providing safe, anonymous channels for employees to raise concerns.

These steps make it much harder for fraud to go unnoticed.

What role does leadership play in fraud prevention?

Leaders set the tone. If executives and managers demonstrate a strong commitment to integrity, employees are far more likely to follow suit. This means:

• Making anti-fraud policies clear and accessible.
• Enforcing rules consistently — no exceptions for "star performers."
• Rewarding ethical behaviour alongside project results.

We have identified we need to train external contacts we consider to be Associated Persons, what is an effective way to do this?

The FTPF package includes micro-learning that is ideal for short engaging training for external contacts.  You'll nee to make sure your LMS supports external assignments, or speak to us about Skillcast managing these assignments for you.

We would usually send out the same Fraud course to all staff, why does Skillcast offer Managers versions of the courses?

The new FTPF offence includes new responsibilities and new penalties for Managers in firms where internal fraud is not prevented.  It's really important to ensure Managers are aware of this, Manager versions of our courses really focus on this and what managers can do to mitigate this risk.

How can I make sure every employee has read and agreed to our anti-fraud and conduct policies?

Our Policy management ensures employees review and acknowledge key anti-fraud and conduct policies, creating a clear audit trail for regulators. You can manage policy updates, track completions, and demonstrate compliance—all from one place.

How can I measure my employees’ awareness of fraud risks and identify gaps in understanding?

Our Fraud Prevention Staff Survey helps you gauge staff awareness of fraud risks and pinpoint areas that need attention before issues arise. You can run periodic surveys to monitor culture, track improvements over time, and target further training.

How can I give employees a secure way to record suspicious activity so we can act quickly?

Our Suspicious Activity Register allows staff to log concerns or irregularities they observe, helping you detect potential issues early. The secure register can be reviewed by compliance teams, enabling prompt investigation and action.

How can I provide employees with a safe and anonymous way to report suspected fraud?

Our Whistleblowing Register gives employees a confidential channel to report potential fraud without fear of retaliation. This demonstrates to regulators that you take whistleblower protections seriously and encourages a culture of transparency.

How can I evidence anti-fraud measures that happen outside of e-learning?

Our Offline Activity Register captures anti-fraud initiatives that take place beyond the LMS—such as manager briefings, toolbox talks, and verbal training. This ensures you can evidence all preventative measures, not just online learning.

Which principle is most important in an insurance contract?

Utmost good faith is the most critical, requiring both parties to disclose all material facts. Without it, contracts risk being invalidated under UK insurance law.

What is proximate cause in insurance?

It is the dominant, effective cause of loss, not merely the last or nearest event. Courts use proximate cause to determine whether a peril covered by the policy actually triggered the claim.

How does the principle of indemnity work in real-life claims?

The principle of indemnity ensures you’re restored to your pre-loss financial state, not profiting from claims. For example, if your insured car repair costs £9,000, the insurer pays that amount, not the full policy limit.

What types of firms are regulated under CONC?

Under the Consumer Credit sourcebook (CONC), firms engaged in consumer credit activities, including lenders, credit brokers, debt management firms, and credit information services, are regulated by the Financial Conduct Authority (FCA). This encompasses a broad spectrum of consumer finance services, such as personal loans, hire purchase agreements, and credit broking.

How often should firms review their CONC compliance policies?

Firms are required to review their CONC compliance policies regularly to ensure they remain effective and up to date. While the FCA does not prescribe a specific review frequency, it is generally expected that firms assess their compliance arrangements periodically, taking into account changes in business operations, regulatory updates, and market conditions. 

What triggers an FCA investigation into CONC breaches?

The FCA may initiate an investigation into potential breaches of CONC if there is evidence of widespread or repeated failures that could harm consumers. Triggers include patterns of non-compliance, consumer complaints, or findings from supervisory activities that suggest systemic issues.

What kind of staff training is required to meet CONC standards?

To meet CONC standards, firms must ensure that their staff receive appropriate training and supervision. This includes providing relevant training before employees work with reduced supervision and ensuring supervisors have the necessary technical knowledge and coaching skills.

How does insider trading affect businesses and investors?

Insider trading damages market fairness, giving some investors an unfair advantage and undermining trust. For businesses, it risks reputational harm and FCA penalties, even without personal gain. Investors face distorted prices and reduced confidence, with the FCA finding signs of insider dealing in nearly a third of UK takeovers.

What tools are used to detect insider trading?

The FCA relies on surveillance systems, transaction data, and Suspicious Transaction and Order Reports (STORs). Firms must keep insider lists and use internal trade monitoring, pre-clearance systems, and staff training.

How does the FCA regulate insider trading?

The FCA regulates insider trading under the Financial Services and Markets Act 2000, the Criminal Justice Act 1993, and UK MAR, reinforced by the Financial Services Act 2021. Sanctions include unlimited fines, injunctions, public censures, and up to 10 years’ imprisonment.

What is a Recognised Investment Exchange (RIE) and how is it regulated?

A Recognised Investment Exchange (RIE) is a UK exchange authorised by the FCA to trade securities or derivatives. RIEs must maintain orderly markets, monitor for abuse, and ensure member compliance, with the FCA supervising their operations and enforcing rules as needed.

What steps can firms take to avoid FCA penalties?

Firms can mitigate the risk of FCA penalties by establishing comprehensive compliance frameworks. This includes implementing clear policies on market abuse, conducting regular staff training, maintaining accurate insider lists, and ensuring timely submission of Suspicious Transaction and Order Reports (STORs). Additionally, firms should regularly audit their surveillance systems to detect and address any potential issues promptly.

How does the FCA monitor and detect market abuse?

The FCA employs advanced surveillance tools to monitor trading activities, including the analysis of transaction reports and order books. Firms are required to submit STORs when they suspect market abuse, and issuers must maintain insider lists. The FCA also collaborates with other regulators and uses data analytics to identify and investigate potential instances of market abuse, ensuring the integrity of UK financial markets.

What does FCA COBS stand for?

FCA COBS stands for the Financial Conduct Authority’s Conduct of Business Sourcebook, which sets out rules and guidance for how regulated firms must interact with clients, market products, and provide advice.

What is the main purpose of COBS?

Its goal is to ensure firms act honestly, fairly, and professionally in the best interests of clients, with clear, fair, and not misleading communications.

Where can I find the full COBS rules?

The complete COBS section is available in the FCA Handbook, which is updated frequently.

Who needs to comply with COBS rules?

Any FCA‑regulated firm carrying out designated investment business, ancillary services, or insurance‑related activities in the UK, including advisers, brokers, wealth managers, and investment platforms must comply.

Who do the FCA Principles apply to?

They apply to all FCA‑regulated firms and individuals performing controlled functions, regardless of size or sector.

How are the FCA Principles enforced?

The FCA enforces the Principles through regulatory, civil, and criminal powers, including fines, public censures, and prohibitions. Their approach is detailed in the FCA Enforcement Guide.

What happens if a firm fails to notify the FCA of an issue?

Firms are required to notify the FCA promptly of any matters that could have a significant adverse impact on their ability to meet regulatory requirements. Failure to do so can result in enforcement action, including fines or other sanctions.

How can firms ensure compliance with the FCA Principles?

Firms can ensure compliance with the FCA Principles by implementing robust governance frameworks, conducting regular risk assessments, and maintaining effective internal controls. This includes establishing clear policies and procedures, providing ongoing staff training, and fostering a culture of compliance throughout the organisation.

How often should FCA Code of Conduct training be refreshed to remain effective?

Firms should refresh Code of Conduct training at least annually, or more frequently if there are significant regulatory updates, changes in business processes, or lessons learned from compliance breaches. Regular refreshers help maintain awareness and reinforce the expected behaviours across the organisation.

How can firms tailor Code of Conduct training for high‑risk business areas?

Training should be customised to reflect the specific risks and responsibilities of high-risk areas, such as trading desks or advisory teams. This can include scenario-based exercises, role-specific guidance, and practical examples relevant to the department’s day-to-day activities, ensuring staff understand the real-world implications of the Conduct Rules.

What tools or technology can support ongoing compliance monitoring?

Firms can leverage compliance monitoring software to track employee behaviour, trade activity, and adherence to policies. This includes workflow tracking, automated alerts, data analytics, and communication surveillance systems to identify potential breaches quickly and efficiently.

What steps can be taken to rebuild trust after a breach of the Conduct Rules?

Rebuilding trust requires transparency, accountability, and proactive remediation. Firms should promptly investigate the breach, implement corrective measures, communicate clearly with stakeholders, and enhance training and oversight to prevent recurrence. Demonstrating a strong culture of compliance and ethical behaviour is key to restoring confidence among clients, staff, and regulators.

Who needs to comply with CASS rules?

Any firm regulated by the FCA that holds or controls client money or assets must comply with CASS rules. This includes investment firms, asset managers, and certain insurance intermediaries.

How often should firms review their CASS compliance procedures?

Firms should review their procedures at least annually, or whenever there are changes in regulation, business structure, or risk exposure. Regular internal audits and gap analyses are recommended.

What role does staff training play in CASS compliance?

Training is critical. Staff must understand their responsibilities under CASS, know how to handle client money and assets correctly, and be able to identify and escalate potential breaches.

Which FCA compliance topics are covered?

Skillcast supports financial-services learning in areas including Consumer Duty, SM&CR, Conduct Rules, financial crime, fraud, financial promotions, vulnerable customers, complaints, CASS, COBS, CONC, MCOB, operational resilience, data protection and information security.