Document Actions
July 11 2008
UK fraud now at record levels
BDO Stoy Hayward research shows the biggest increase in fraud since research began in 2005, but retailers can rest easy as it’s the banking and insurance sectors that account for 90% of the fraud
While most people would say that we’re in the clutches of a recession and we’re in the bad times for retail, there’s a section of the community that has party hats on, and is well into their third bottle of champagne, and is celebrating madly because the good times are here. And it’s not receivers or accountants, it’s fraudsters, according to a new report from accountants and business advisers BDO Stoy Hayward.
The latest FraudTrack analysis shows fraud figures have increased at an alarming rate, the research shows that reported fraud cost UK businesses over £705m in the last six months. That’s a 74 percent increase on the same period last year. The value of reported fraud in April 2008 alone was £317m and there is no sign that there is going to be any let up in the future.
Luckily the fraud seems to be worst in the finance and insurance sectors, and instead of calling Interpol to track down crack teams of red-handed Ruskie-rotters all the police need do is stroll down the corridor to collar the crims. Reported fraud in the banking and insurance sector touched £636m -- a phenomenal 90 percent of the total cost of fraud in the first 6 months of 2008 – and a 15 fold increase from fraud levels last year.
The report concludes that most businesses need to be aware that their biggest threat is not organised criminal gangs, but their own “trusted” internal management and people they do business with everyday. Management fraud accounts for 46 percent of fraud cases and third party fraud accounts for 32 percent, costing businesses a total of £541m, which makes up 77 percent of all reported fraud in the first half of 2008.
Simon P. Bevan, head of BDO Stoy Hayward’s Fraud Services Team said: “What we are essentially saying is that management are robbing you blind, suppliers are ripping you off left right and centre and regulators are breathing down your neck. As the recession deepens, regulatory pressures will increase and regulators will become more intrusive, so be prepared. That’s a triple whammy for businesses in the UK.”
Bevan continued “The fraud problem facing all UK business could be bigger still. Our latest figures, while grave enough, show only the value of reported fraud -- the fraud we actually know about. What is really scary is that these figures don’t even include losses that may have been incurred by rogue traders. When you add in the fraud that’s not yet been uncovered, or which businesses have discovered but don’t wish to expose, the real cost to UK industry could be much, much higher.”
As economic conditions worsen, the experts at BDO Stoy Hayward believe the problem of UK business fraud is certain to grow. As Bevan explains:
“The combination of spiralling personal debt and desperate employees spells real danger for business. Especially when, sadly, our figures provide clear evidence that commercial organisations of all types and size throughout the UK are currently failing, in some cases quite spectacularly, to get to grips with the fraudulent activity of their staff.”
“We are seeing a dramatic increase in banks, corporates and public sector organisations contacting us directly about our fraud investigation and prevention services and we expect this to rocket further still. Interest is coming from Board level as senior executives at British businesses are becoming increasingly concerned about fraud risk as the credit crunch bites.”
Subscriptions