Legal Village

We all pay the price of fraud

Posted 9/03/2007 by Jonathan Djanogly

Having been asked to join Legal Village as a blogger, I thought the breakfast seminar on fraud which I spoke at on Wednesday is as good a place to start as any. The Attorney General, the Association of British Insurers (ABI) and the City of London Police Commissioner also spoke and there was much agreement as well as some good ideas being voiced.

The Government’s Fraud Review highlights that the harm caused by fraud is second only to that caused by Class-A drugs, not least as a result of its relationship with organised crime. This shocking fact demonstrates how fraud is such a relevant issue in the UK. It is becoming a seriously high-tech, complex problem.

There are, as a result, several areas that need to be looked at in more depth. In particular, the idea of a National Fraud Reporting Centre, as recommended by the Association of Chief Police Officers, will be worth serious consideration to coordinate best practice as well as to have a central reporting system. A scam used in one part of the country is bound to be tried somewhere else. Currently, there is a successful partnership between the ABI and the City of London Police and this model should be rolled out to other forces.

Many people don’t seem to understand that we all end up being the victims of fraud – they assume that because big business and insurers will foot the bill, their ‘minor’ fraud doesn’t count. But the net result is that we all end up paying higher prices in the shops, higher interest rates on mortgages and bigger insurance premiums. Furthermore, I was interested to hear the police view that terrorist organisations are increasingly using low-value scams to keep their fund-raising ‘under the radar’.

There is therefore a real need to educate the general public so fraud becomes socially unacceptable and the public are prompted to act more prudently.

There are several ways to help achieve this. Currently, just 15% of businesses report fraudulent activity to the police. The best way to tackle fraud effectively is for the private sector to work in partnership with law enforcement agencies not only in prevention but in investigation and prosecution as well. I was impressed not only with the close working relationship between the City of London Police and the Serious Organised Crime Agency but also the Commissioner’s suggestion that private-sector experts should be seconded as special constables for a year or two.

Another important point raised was how manufacturers need to be encouraged to work constantly with the authorities to ‘design-out’ crime – using technology to stop crime rather than to allow it to be used by crime.

The Attorney General, Lord Goldsmith, outlined the Government’s approach. Clearly, organising the Fraud Review is to be welcomed and the redefinition of fraud, in last year’s Fraud Act, should make prosecutions more straightforward.

On the other hand, Conservative and Liberal Democrats will not support the Government’s attack on jury trials; we still have not received any serious evidence to show that destroying this important right will deliver any improvement to justice.

On a more positive note, I did agree with the Attorney’s suggestion that this is an area where much better use of plea-bargaining could be made.

So is Government doing enough to counter fraud, irrespective of the supportive words? With the UK losing the equivalent of 6% of GDP each year through undetected fraud, the answer has to be no.