Rise In Fraud Raises Concern About Lack Of Prosecutions

New Report Reveals Increase In Reporting Incidents


The 2011 FraudTrack report revealed that reported fraud increased 50 per cent across the UK last year to reach a value of more than £2 billion, marking a seven-fold increase since the launch of the survey in 2003.

It revealed there were 413 reported cases in 2011, each with an average value of £5 million. The finance and insurance sector account for 27 per cent of all reported fraud.

According to Sarah Wallace, a London-based partner in Irwin Mitchell’s specialist Regulatory and Criminal Investigations Group, other issues appear to be dominating the SFO’s time in recent months.

She outlined: “The difficulty is that the SFO is not investigating or prosecuting large numbers of complicated fraud cases. According to the SFO website in 2010-11 only 17 cases involving 31 defendants went to trial and only £64 million of funds were recovered. 

“The SFO’s current focus is on encouraging fraud and corruption whistle-blowing, civil settlements and a campaign to introduce legislation for deferred prosecution agreements.

“A deferred prosecution agreement is a mechanism in the US that allow corporates to enter into remedial undertakings and pay a fine to avoid a criminal prosecution.  Individuals involved may still be subject to a criminal prosecution.  However, the concern is that for complex cases, well funded individuals and companies may well avoid prosecution. 

“Further to this, whilst the FSA is tackling more complex City financial crime cases that involve insider dealing or misleading statements, the numbers of prosecutions are low. Prosecution of financial crime remains the domain of the SFO or CPS, but their effectiveness is being put to the test by ever-shrinking budgets.”