UK fraud losses jump 76% in 12 months

UK companies lost a record £2.1bn to fraud last year - and that's just the stuff we know about.

Last Updated: 31 Aug 2010

Clearly the recession is encouraging people to be a little bit naughty: accountancy BDO says that the UK’s reported fraud losses jumped to nearly £2.1bn in 2009, a 76% increase on the previous year. Frauds are getting bigger, bolder and more frequent – and according to BDO, the situation is only going to get worse. It reckons this total could soar to more than £5bn in the next couple of years, as the financial chickens of the recession come home to roost and the true horror of the banks’ dodgy loan books becomes clear. That’s a few billion reasons to be vigilant…

It’s not unusual – or surprising – for fraud to increase during a recession. Nonetheless, the extent of this hike is eye-catching: BDO identified 363 cases, up from 285 last year, the average value of which topped the £5m mark for the first time (up from £1.8m in 2003). And it’s worth pointing out that this study only covers reported frauds over the £50,000 mark. Throw in lower-value frauds, and those that have not been reported to the authorities (including civil actions settled out-of-court, which BDO reckons may account for 90% of the total), and it’s clear that this £2bn figure only hints at the true extent of the UK’s fraud problem.

This may not come as a huge shock: according to accountancy MacIntyre Hudson, there were no fewer than 298,302 reports of fraud in the global media in 2009, including high-profile stories like Bernie Madoff and Allen Stanford. But its ‘bottom 10 frauds of the year’ also includes the likes of Veronica Hyland, a lawyer who conned a dying millionaire out of £90,000, and the Bell sisters, the dodgy pensioners whose benefit fraud scam netted them over £600,000. Not all of these unlikely fraudsters turned to crime out of necessity, but the prevailing climate presumably didn’t help.

The worrying bit is that fraud losses may continue to spiral even after the recession ends. BDO’s fraud chief Simon Bevan reckons there’s always a time lag: and this time round, he thinks that when the banks really start going through their non-performing loans with a fine tooth-comb, it will uncover more ‘potentially horrendous fraud losses’ due to dodgy borrowers. And with recessionary cost-cuts and Government tax hikes likely to make money even tighter for most people in the coming months, the temptation to cut corners will only increase.

So business owners need to keep both eyes open – if a number looks too good to be true, there may be a very good reason for that...

In today's bulletin:

Tesco enjoys magic Christmas after card trick
Kraft is trying to buy us for Buttons, Cadbury insists
Glazers milk Man United for over £20m in fees and loans
UK fraud losses jump 76% in 12 months
The Parent Project: The day I saw my future in a fridge

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