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UK Government launches new Beating Crime Plan with a focus on fraud

  • United Kingdom
  • Financial services disputes and investigations
  • Fraud and financial crime

04-08-2021

 

On 27 July 2021 the UK Government published its Beating Crime Plan (the “Plan”). The Plan sets out the UK government’s strategy for cutting crime. One of the key focuses, as set out in the Plan, is the UK government’s proposal to tackle fraud. According to the Plan, fraud accounts for approximately 42% of all crime against individuals. A report published by the Centre for Counter Fraud Studies at the University of Portsmouth in 2019 suggested that fraud costs UK businesses £130 billion each year. 

The publication of the Plan follows hot on the heels of other government agencies who have set out their proposed plans to fight fraud. In March 2021, the Crown Prosecution Service published its first economic crime strategy which included fraud, which was  covered in our previous briefing. The recently published FCA Business Plan 2021/22 has  fraud as one of the FCA’s key priorities for the upcoming year. Please see here for our previous briefing on this. One of the Serious Fraud Office’s (“SFO”) key priority focus in 2021/2022, as set out in its Business Plan, will be investment fraud.     

We consider in this briefing the existing approach for reporting fraud and the planned new approach as set out in the Plan.

The current approach

Reporting fraud

Currently, suspicions of fraud can be reported to the UK law enforcement authorities in two ways:

1.    An online report through the Action Fraud website

Action Fraud is the platform through which almost all frauds[1], including cyber-fraud should be reported, from small frauds against individuals to large frauds against corporates. Action Fraud is run by the City of London Police.

The Action Fraud reports are passed to the National Fraud Intelligence Bureau (“NFIB”) which is the National policing lead for economic crime. The NFIB assess the report and where appropriate assign it to the relevant local police force/ law enforcement agency for investigation.

https://www.actionfraud.police.uk/reporting-fraud-and-cyber-crime

2.    An online report to the Serious Fraud Office

The SFO is the National law enforcement lead for serious and complex fraud and bribery. The SFO encourage self-reports from whistle-blowers where it is believed that the fraud is serious or complex.

Serious frauds are generally defined as those which pose a serious risk of harm to the general public, the reputation and integrity of the UK as an international financial centre or to the economy and prosperity of the UK. Complex frauds are those which require the application of the SFO’s specialist skills, powers and capabilities.

https://www.sfo.gov.uk/contact-us/reporting-serious-fraud-bribery-corruption/

Prosecuting Fraud 

A report to either Action Fraud or the SFO does not guarantee an investigation of the report or a prosecution or conviction following investigation.

  • an investigation will only take place where it appears to the law enforcement agency that there are reasonable grounds to suspect an offence has been committed
  • a prosecution will only occur where a prosecutor is satisfied that there is a realistic prospect of conviction
  • a conviction will only occur where a Court or jury is satisfied beyond a reasonable doubt that an offence was committed

In February 2020, the director of the SFO, Lisa Osofsky, criticised the UK’s “antiquated fraud laws” and stated that she wished that there were lower evidential standards for fraud.  

A review led by ex-deputy Scotland Yard Commissioner Sir Craig Mackey last year found that “there is a mismatch between the scale of fraud offences and the capacity and capability of (police) forces to investigate them”.  The review also revealed fewer than 1% of police officers directly investigate fraud and despite nearly 2,000 fraud offences being committed daily in England and Wales, just one in 50 is prosecuted.

Upon conviction the Court can make orders for the confiscation of assets and the compensation to victims, however the effectiveness of those orders depends upon how quickly the assets were preserved and protected once the fraud was discovered.

The new proposed approach 

The Plan sets out a framework for tackling fraud which includes:  

  • restricting the opportunities that fraudsters seek to exploit by working with the tech, financial, telecoms and accountancy sectors. The forthcoming Online Safety Bill will require tech companies to tackle fraud, giving firms the responsibility of protecting their users from fraud. However, the Online Safety Bill has received some criticism for its failure not to include paid for online scam ads in the draft bill
  • making it harder for fraudsters to target the UK. Since its launch last year, the National Cyber Security Centre has shut down over 50,000 scams and taken down almost 100,000 websites
  • improving the Government’s understanding of how fraudsters are operating. Action Fraud will be replaced with an improved national fraud and cybercrime reporting system and increase intelligence capabilities in the NCA and the national security community to identify the most harmful criminals and organised criminal gangs
  • taking fraudsters off the streets and increasing arrests and prosecutions. UK Government will increase law enforcement investigative capacity in the City of London Police, as national lead force for fraud, and in Regional Organised Crime Units across England and Wales. A new fraud investigative function in the NCA will be established to target the most complex and serious fraudsters, meeting a manifesto commitment to create a new national cybercrime force focused on fraud
  • Better support will be provided for the victims of fraud by expanding the National Economic Crime Victim Care Unit and improving public communications

It is the proposed replacement of Action Fraud as set out in the Plan which has grabbed the most headlines. Action Fraud has faced many criticisms since its inception in 2009. In August 2019, an investigation by the Times produced damning revelations about the way the Action Fraud centre treats victims.

On 2 July 2021, the City of London Police launched an invitation to tender to suppliers to procure technology for the new national reporting centre for fraud and cybercrime to replace Action Fraud. According to a press release produced by the City of London Police, the contract with the current supplier was due to end in 2022 and it was always the intention to procure a new supplier to take on the fraud reporting service beyond this. City of London Police have said that the proposed replacement is nothing to do with the criticisms Action Fraud has faced. Instead, the planned replacement is due to the advances in technology, as well as demand for the service rapidly growing, that the current system needs to be updated and improved to deal with the change in the national, and international fraud and cybercrime landscape, and provide greater integration across law enforcement. The number of fraud reports has continued to rise - according to Action Fraud’s website, it received 233,826 reports of fraud in 2020 with reported losses in respect of the frauds totalling £1.58Bn.  

It remains unclear as to what the replacement for Action Fraud will look like exactly and when exactly it will be implemented, but the hope from individuals and businesses alike,  is that it will be more successful in helping to fight and prosecute fraud than its predecessor.    



[1]   Benefit, Immigration and Tax fraud should be reported directly to the appropriate Government department, e.g. HMRC