Report highlights lack of resources and training as key causes of fraud in UK
UK businesses should consider using private prosecutions to fight the problem of corporate fraud, a study has claimed.
Research from the University of Portsmouth’s Centre for Counter Fraud Studies, found that only around 1.5% of fraud cases were reported, with only 0.4% of those resulting in a successful prosecution.
The report points to a lack of resources, training and awareness as key contributors to the problem, which is estimated to cost the British economy around £73 billion per year. And, while a number of civil litigation measures exist to fight fraud, the report’s authors note that these remain significantly underutilised.
To counteract the problem, the study recommends establishing a not-for -profit organisation to help small to medium-sized companies pursue and prosecute fraudsters, in addition to deploying specialist fraud officers across the police.
Dr Mark Button, Director of the Centre for Counter Fraud Studies, said: “We were shocked at the tiny proportion [of cases] which are dealt with by the criminal justice system. We were also surprised at the many alternatives to criminal prosecution which could be just as effective, but which are generally under-utilised by organisations. It is vital we do more to punish fraudsters and we hope this report helps to stimulate further action and debate.”
The report also recommends easing restrictions to enable the use of civil sanctions, in addition to educating investigators on the range of sanctions available and establishing a preventive tool from a fraudster database.
Mark Surguy, Partner at law firm Eversheds and Chair of the Midlands Fraud Forum that jointly sponsored the research, said: “The empirical evidence offered by this research only serves to highlight the need for a new and invigorated approach. Its conclusions must not be ignored and organisations should take notice in order to be prepared to successfully prevent and respond to fraudulent activity.”
· Look out for our special report on Fraud: The unseen threat in the September issue of StrategicRISK
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