UK authorities have reached the limit of their ability to prosecute offenders when organisations come to tackle fraud reports BDO LLP’s. The figures in their 6 monthly fraud update report has prompted Simon P. Bevan, Head of Fraud Services at BDO LLP, to suggest that the finance and insurance sectors may be ‘leading the way’ by choosing to deal with the issue via civil, rather than criminal, means.
According to the half-year FraudTrack figures, released by BDO LLP, reported fraud totalled approximately £920m (1 December 2010 to 31 May 2011), compared with £1.06bn this time last year. The average value of a single reported fraud has also dropped to approximately £4.5m, compared with just under £6m this time last year. This is the most significant drop in 4 years yet, with 205 reported cases, also represents the highest number of reported incidents.
For BDO’s experts, the figures indicate a disparity between how fraud is being tackled in the private and the public sectors. Whilst fraud reported by those in public administration has almost doubled since last year (from approximately £216m in 2010 to £431m in 2011), fraud reported in the finance and insurance sectors has almost halved in the same period (from around £524m in 2010, to £274m in 2011). Public administration cases now represent 46% of all reported fraud in the UK.
In terms of types of fraud reported, procurement fraud – often anecdotally referred to as the most common type of fraud – was only reported twice within the period, compared with theft and cash fraud, which was reported 59 times.
Simon P. Bevan, Head of Fraud Services at BDO LLP, comments
On the decline in reported fraud:
“What’s particularly interesting about these figures is that they don’t necessarily correlate with what we’re seeing in the market. Having worked through two recessions, my experience is that fraud is more likely to be uncovered in these market conditions. Do these figures indicate that less fraud is happening? Not in my view. Rather, we think this represents a reluctance to report fraud to the authorities, particularly in the financial services sector. As the old adage goes, ‘90% of fraud goes unreported’ – so this isn’t particularly surprising. The fact is that many people who fear that reporting fraud will lead to bad publicity also question whether reporting fraud to the police or SFO is the most effective method of dealing with it. We believe this is a key reason why reported fraud figures are down.”
On differing approaches between public and private sectors:
“What’s likely is that more and more organisations in the financial services sector are finding a different method for tackling fraud. They will most likely be taking the view that the civil approach means they are more likely to recoup lost money and less likely to risk reputational damage.
Pamela Flores is an events professional with experience at Symposium Events, a UK-based conference and events organization. She has worked in editorial and event coordination roles within the HR and expatriate management sector, contributing to the organization of major conferences including the Expatriate Management and Global Mobility conference. Her background spans online editorial work and events management within the professional conference industry.
- Pamela Flores
- Pamela Flores
- Pamela Flores
- Pamela Flores
