Government ‘failing’ to tackle fraud

Ministers have failed to protect people from fraud and must take the problem more seriously if they hope to tackle the £16 billion a year business, a new report warns.

The Fraud Advisory Panel, an independent watchdog led by a former director of the Serious Fraud Office, warns the Home Office and the Treasury “refuse” to make fighting financial crime a priority despite its “huge impact” on ordinary people and businesses.

The panel “warmly welcomes” the government’s first fraud review, published this summer, and praises its “immense thoroughness”. But it says rhetoric must be matched with action – and money.

It calls for a strengthened police response to fraud, with appropriate funding, and says victims’ complaints must be taken more seriously. It is “unacceptable” that police often refused to accept reports of fraud and that so many cases are not investigated, it says.

The panel also urges a reform of the court and legal rules to ensure fraudsters are brought to justice more quickly. In addition, it makes the case for an independent authority to oversee these efforts and monitor the activities of government departments.

Chairwoman Rosalind Wright said the changes should cost no more than £27 million a year, compared to £16 billion that fraud costs the economy annually. This includes millions in losses to firms, and it also adds five per cent to insurance premiums.

“Given the known facts about the financial cost and human damage caused by fraud, it is frankly ludicrous to argue that such monies could not be found,” she said.

She warned: “The [government’s] review recognises that the harm caused by fraud is second only to the trafficking of the most dangerous drugs. But Whitehall’s words, however bold, are no longer enough.

“The Home Office and the Treasury refuse to make fighting financial crime a priority despite its huge impact on ordinary people and business, particularly small firms. The review’s proposals will prove pointless unless they are properly financed.”

Ms Wright blamed the government for trying to get the private sector to pick up the bill for fighting crime, saying: “Law enforcement is, and must remain, a state function.”

In response, a Home Office spokesman insisted the government “takes fraud very seriously” and said it provided more than £1 million a year, matched by the Corporation of London, to help tackle financial crime in the City of London.

The economic crime department took a lead role in investigating fraud in the square mile and across the south-east of England, he said. In addition, the government had funded the £1.4 million pilot of the dedicated cheque and card crime unit.

These projects complemented the work of police forces across the country, the Serious Fraud Office and a new committee on identity fraud, he said. New offences would also be introduced under the fraud bill currently going through parliament.

“The bill will improve the prosecution process by reducing the chances of offences being wrongly charged and should provide greater flexibility to keep pace with the use of technology in crimes of fraud,” the spokesman said.