UK risks being seen as ‘haven for fraudsters’, warns report

The Public Accounts Committee (PAC) said the Home Office was “sluggish and outmanoeuvred” in operations with business sectors, while police morale and public trust were both undermined by system failures.

It said fraud against businesses and individuals is “a significant and growing problem” that now accounts for 41 per cent of all crimes committed in England and Wales.

However, less than one per of around 900,000 frauds reported in England and Wales each year result in an offender being charged or prosecuted for the crime.

There were 3.8 million incidents of actual or attempted fraud in the year to June 2022, and nearly seven per cent of adults in England and Wales experiencing fraud or at least an attempt. While those numbers increase, charges and summonses are dropping.

The PAC said it is “deeply disappointed” in the slow progress made by government in the last five years.

“The Home Office’s most recent estimate of the cost of fraud to individuals is £4.7 billion a year but it can’t quantify the potential cost to businesses,” said the report.

And it added that the criminal justice system’s current approach to penalising and sentencing fraudsters is “insufficient” to prevent the UK being seen as a haven for fraudsters.

Law enforcement is not set up to tackle the challenges presented by fraud, said the PAC.

The volume and complexity of fraud overwhelms the capacity of both Action Fraud and local police forces, who lack the training and resources they need to pursue the hundreds of thousands of cases reported every year.

Despite making up 41 per cent of all crime in the year to June 2022, only around one per cent of police personnel are dedicated to fraud.

“Police morale is being undermined by the time it takes to investigate and prosecute fraud and then the relatively short sentences handed out when prosecutions are successful,” said the report.

“The Home Office is dependent on the banking, technology, telecoms and retail sectors to fight fraud, but will continue to be sluggish and outmanoeuvred if it relies on purely voluntary charters with these sectors.

“The majority of frauds are also suspected to have an international element, but relationships with overseas criminal justice agencies are immature and threatened by the UK’s lack of domestic capacity.”

Dame Meg Hillier MP, chair of the PAC, said: “Given the pervasive and damaging effects of fraud on business, individuals, and society it is extremely poor performance that government still isn’t even able to fully grasp the extent let alone reduce the prevalence or harms.

“There is just no sign that government has a grip on fraud or an adequate strategy to address it, while victims are left to pay the price.

“Becoming a victim of fraud can cause lasting psychological damage. It can mean losing a lifetime’s savings, your whole retirement plan, or even your current business and livelihood.

“The system is so poorly resourced and coordinated compared to the problem it’s addressing that victims feel lost in the system and without hope of recourse. Opportunities to prevent further harm are being missed and public trust in law enforcement is undermined.”

The report comes as City of London Police announced that a month-long crackdown on fraud in February resulted in 290 arrests, 58 warrants  executed and more than £6 million in assets seized or restrained.

Operation Henhouse, a national fraud intensification campaign, saw police forces, ROCUs (regional organised crime units) and the National Crime Agency target a variety offences, including romance fraud, banking and insurance fraud, as well as money laundering and perverting the course of justice.

High-value seizures included a BMW M5 Competition worth £96,000, and multiple luxury items including Rolex watches and jewellery. Cryptocurrency, cash and gold were also seized.