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Justice Committee calls for UK Government to revolutionise the fight against fraud

  • United Kingdom
  • Fraud and financial crime

27-10-2022

In a damming report published recently into fraud and the justice system, the UK Parliament’s Justice Committee has found that prioritising traditional forms of crime has left the justice system ill-equipped to deal with the continuing rise in fraud. The Justice Committee has called on the Government to revolutionise the way in which the UK fights fraud, ensuring it is given greater priority and resourcing across the justice sector to boost prevention, investigation and prosecution alongside improving treatment for victims of this crime.

Background

On 18 October 2022, Parliament’s Justice Committee published its report regarding fraud and the justice system (the “Report”). This follows on from the Committee’s third session, which we reported upon in an earlier briefing here.

The Report emphasises the need for a change in the UK’s counter-fraud philosophy and practice. The Report calls upon the Government to:

o allocate greater priority and resourcing;

o be more proactive on prevention;

o be more aggressive in investigation, prosecution and conviction; and

o be much more focused on victims.

This is pertinent as the threat of fraud is constantly growing and evolving. Criminals are quick to adapt their methods to exploit weaknesses in new systems or technologies. The enforcement and prosecution of these crimes needs to adapt to keep pace with the crimes being conducted.

Tackling fraud is a stated priority for the Government. In October 2021, the Home Secretary announced the relaunch of the Joint Fraud Taskforce, and a new Fraud Action Plan is expected later this year. The Government has committed £400 million to tackle economic crime over the next three years. However, despite these stated commitments, the Committee was told that the Government’s current approach to fraud is “disjointed and lacking in an overarching strategy to prevent, investigate and prosecute these crimes”.

Victim focused approach

The Report calls for a victim-focused approach that ensures that people know where and how to report cases of fraud. Only 5% of the general population surveyed by Citizens Advice in 2021 knew what Action Fraud, the UK’s national reporting centre for fraud and cyber-crime, was. In light of this, the Government should increase efforts to advertising Action Fraud to raise public awareness.

Even though Action Fraud is being replaced in 2024, the Report highlights that the volume of reports an individual member of staff is expected to deal with makes it difficult to provide a high-quality service to each individual reporting crime. The Report goes on to state that victims should not have to wait for Action Fraud to be replaced before they begin to see improvement to the mechanics for reporting. The Government should action this by ensuring that staffing needs are met in the interim period.

Lastly, the Government should set a minimum standard of care that a victim of fraud can expect to receive when reporting a crime and ensure that all 43 police forces are working with victim care units to provide them with effective support by 2023.

Investigating fraud

In order to be considered an investigative priority for police forces, the Report states that fraud should be made a Strategic Policing Requirement to focus effort and resources. To ensure accountability, performance data should be collected, monitored, and published. As it currently stands, fraud statistics are not included in local and regional policing performance.

The Report highlights the disparity between the amount of work fraud creates for the police and the resources allocated to it. Notably, fraud now accounts for more than 40% of all crime, yet only 2% of police resources are allocated to fraud. Sufficient funding and police resourcing need to be put in place to help bring about a step-change in the response to fraud.

Lastly, as criminals always exploit new technologies, it is important that policing keeps up with the frequent changes in the way fraud crimes are perpetrated. The College of Policing should conduct a review of the training offered to front-line staff to ensure it reflects the changing crime landscape and provides a strong foundation in crimes that exploit technology such as fraud.

Prosecuting fraud

As well as inadequate investigation of fraud crimes, there is also a lack of prosecution. Whilst the CPS has a conviction rate of 84.9% in relation to defendants where fraud and forgery were the principal offence, this level of prosecution represents only about 0.75% of fraud crimes reported in the year.

The Committee heard of significant delays in hearing fraud cases, problems with the application of disclosure rules in cases with large amounts of digital material and the importance of engagement between all bodies involved in order to conclude cases in a timely and efficient manner.

The Committee heard compelling proposals for dedicated economic crime courts to ensure there are judges with the right skill to oversee what can often be lengthy and sometimes complex cases. This would also help address the backlog in fraud cases, which are not always seen as a priority for listing.

Disrupting and preventing fraud

Although it is advisable for the Government to change the way they investigate and prosecute fraud, the inquiry of the Committee repeatedly heard that early disruption and prevention were key to delivering the best outcomes for the public and the economy. This requires co-operation across the private and public sectors, with the Government using its convening power to unite stakeholders, such as technology and social media companies, which have a vital role to play in designing fraud out of their systems.

The Report recommends introduction of a new criminal offence for ‘failure to prevent’ fraud, which would help to hold companies accountable for relevant criminal activity facilitated by their business.

The Report also suggests that the Government should plan a national awareness campaign as part of the new Fraud Action Plan, to raise public awareness of fraud and the personal actions people can take to reduce their chances of falling victim to such crimes.

Replacing Action Fraud

The Government is replacing Action Fraud with a new national fraud and cybercrime reporting system, due for implementation in 2024 (with more details on the initially announced plans discussed here). The planned changes are said to be focused on the technology underpinning the service. While this is an important development, changes to the service also need to bring about improvements in the victim’s experience of reporting a fraud crime. This again touches on the victim-focused approach that the Committee believes is crucial for tackling fraud. The new service needs to focus on victim experience, ensuring that there are trained individuals staffing Action Fraud’s successor who can assess the needs and vulnerabilities of victims and direct them to appropriate resources.

Commentary

There have been many, what many would say are deserved, criticisms over the years about the UK’s record in prosecuting fraud. It is hoped that the renewed focus on fighting and prosecuting fraud by both regulators and the UK Government will result in some improvements. Fraud was a key focus in both the 2021/22 and 2022/23 FCA Business Plans, as well as in the Government’s 2021 Beating Crime Plan (see briefing here ). The likelihood of any serious changes occurring will depend on the effectiveness of Action Fraud’s replacement. It is clear that the Committee expects that there will be, and that there needs to be, some major improvements as to how fraud is viewed and treated in the UK.


Authors: Anupreet Amole, Laura Welsh and Megan Moran

To discuss any of these issues, or other economic crime topics, please contact: