Fraud Barometer January 2017 UK regional highlights | KPMG | UK
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Fraud Barometer January 2017 UK regional highlights

Fraud Barometer January 2017 UK regional highlights

The stories across the UK regions for 2016.


Partner, Forensic

KPMG in the UK


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Fraud Barometer January 2017 UK regional highlights

Key findings for Scotland

  • Volume of cases fell, but value of loss rose to £24.3 million, more than five times greater than in 2015.
  • Investor fraud triples, leading to losses of £19 million making up more than three quarters of the total value of fraud committed.
  • The average value of each case was £2.7 million compared with £0.4 million in 2015.
  • Fraud perpetrated by management rose, accounting for over half of all cases heard in 2016.

“While the number of instances of high value fraud have fallen, unfortunately we have seen a large increase in the total amount involved. Although one case in particular makes up the bulk of that increase, the average value of cases is still up across the board. Investment fraud can affect all of us if we are not wary. Although employee fraud has fallen, we know that insider fraud is still something which deeply concerns businesses and the threat remains. What will be troubling CEOs is the rise of fraud undertaken by those in a position of power. The latest findings reflect a substantial shift in the source of fraud from that of lower ranking staff for lower amounts, to much higher values being stolen by more experienced and senior staff exploiting positions of power and trust. What companies need to ensure is that processes and safeguards are reviewed to reflect this changing face of fraud and that there is level of oversight for all staff, regardless of position within an organisation.”

Ken Milliken, Head of Forensic for KPMG in Scotland

Key Findings for the North East

  • Cases valued under £1million jump by 55 percent in the region.
  • Fraud cases rise by 25 percent to 22 in 2016.
  • The value of fraud perpetrated by employees in the region has more than tripled, from £274,000 to £851,000.
  • Investors have seen the most significant increase in fraud value, with £10 million worth of fraud committed against them this year, compared to £2.9 million in 2015.

“Fraud is on the up and dominated by low-value cases, suggesting individuals are stealing less significant amounts of money in an attempt to avoid detection. The fact employee fraud has more than doubled in comparison to last year is also concerning. It’s a stark warning that business owners need to be vigilant when it comes to keeping an eye on potential fraudulent activity in their own organisations, and highlights the importance of implementing appropriate fraud prevention measures. Only by doing so will management teams be able to effectively mitigate risk and protect their business.”

Sara Smith, Senior Manager, KPMG Forensic in the North East

Key Findings for Yorkshire

  • Commercial businesses remain the most common target for fraudsters in the region, but value of activity dropped by 21 percent.
  • The value of fraud against financial institutions in Yorkshire has more than trebled in 2016, to £2.1 million.
  • High-value fraudulent activity targeting investors accounted for £11.7 million (61 percent) of the combined value of all fraud in the region.
  • Professional criminals were the most common perpetrators, accounting for 40 percent of all cases.

“Our region is known for its financial services sector, and its worrying to see the value of cases against our banks, building societies and investment community increase so dramatically. Our research also highlights the high number of unscrupulous individuals out there who are purposely targeting businesses for their own financial gain. All of this combined continues to highlight the importance of fraud prevention, and should prompt management teams to remain vigilant and keep alert to the risk of fraud.”

Vivien Hopkins, Forensic Director at KPMG in Leeds, Yorkshire

Key findings for the North West

  • 21 fraud cases, worth £19.8 million, brought to courts in the North West during the year.
  • Commercial businesses remain most common target for fraudsters in the region, 49 percent by value.
  • Value of investor-related frauds nearly doubled with fraud against investors up by 89 percent during the year to £3.6 million.
  • More than half of the fraud cases (57 percent) in the North West were committed by professional criminals.

“Our research shows that bogus investment schemes continue to catch people out and will often target the vulnerable in our society. However, once again, it is commercial businesses that were the most common victim of fraud in the region. This suggests that more still needs to be done to raise fraud awareness to protect against corporate fraud. We often find that organisations that have suffered a significant fraud were not aware of their key fraud risks, having never performed a detailed fraud risk assessment.”

Graham Cochran, Forensic Director at KPMG in the North West

Key findings for the Midlands

  • Government organisations in the region lost £151 million to fraudsters in 2016.
  • The value of alleged fraud increased by 330 percent.
  • The Midlands ranks second highest for fraud case value, accounting for 20 percent of the UK’s total in 2016.
  • The number of frauds committed by management level staff saw a 670 percent increase to £138 million in 2016.

“While it’s positive to see a smaller number of cases coming to court in the Midlands over the year, the threat fraud poses is still very real and we must remain vigilant. £222 million is a huge figure and a major cause for concern, as our findings suggest that fraudsters are using technology to become more sophisticated in their methods. Government organisations were the main victims in 2016, having seen more fraud perpetrated against them than any other type of organisation, and with economic uncertainties ahead, there’s every possibility that fraudsters will look for more ways and shortcuts to make money. What’s also worrying is that people in management represent the largest percentage of fraudsters in the Midlands, so it’s essential that business owners keep a close eye on those in positions of power, particularly if they have access to the business’s finances. It’s absolutely crucial that the appropriate anti-fraud controls are in place to help mitigate this risk.”

Julie Bruce, Forensic Director at KPMG in the Midlands

Key findings for the South West and Wales

  • Fraud in the South West and Wales has bucked the national trend, with fraud losses and number of fraud cases down in the South West to £9.5 million, and £5 million in Wales.
  • Investors and financial institutions were the principal victims of fraud, 75 percent of fraud by value in the South West.
  • Financial institutions suffered losses due to cyber-attacks, £2.0 million in the South West and a doubling of cases heard in Wales.
  • In the South West, the frauds committed by men and women working in collusion account for 74 percent of total fraud losses.

“The South West has seen fewer, but higher value cases of fraud in 2016, with calculating criminals finding ways to dupe individuals and financial institutions out of greater amounts of cash. Throughout 2016, the stand-out victims in the region have been financially vulnerable investors. They are being duped into false schemes by professional fraudsters, with the assumption that they will either see a return on investment, or a service. People living in the South West should be particularly vigilant when being asked for money for seemingly safe schemes. There has been a significant increase in financial institutions falling prey to cyber attacks, which will no doubt see these companies in the region seeking reassurance that their systems and online bank accounts are safe.

“Wales has seen a reduction in fraud in 2016, but it’s interesting to see that customers are looking for and finding ways to defraud financial institutions, such as mortgage companies. This paints a very different picture from last year, when managers were the primary perpetrators and vulnerable individuals were the primary victims. Financial businesses in the region will no doubt be seeking reassurance that their systems are safe from unsuspected attacks by customers.”

Dawn Baker, KPMG’s Forensic Senior Manager in the South West and Wales

Key findings for London and the South East

  • London and South East suffered over £800 million worth of fraud in 2016, nearly three quarters of all of the UK fraud. 
  • Commercial businesses were the hardest hit - £352 million, an increase of over 1800 percent.
  • 79 percent increase in the losses due to fraud carried out by professional criminals. 
  • 98 percent of losses due to fraud recorded in London and South East for 2016 were committed by men.

“It’s not surprising given London’s position as a major financial and business centre that so much of the UK’s fraud is concentrated in the South East. Commercial operations in the region have been particularly hard-hit this year as insiders and criminal gangs target businesses without robust internal controls. Companies need to be rigorous about re-enforcing their anti-fraud measures and the importance of employee screening and pre-employment due diligence measures cannot be understated. Having robust prevention and detection mechanisms is important to make sure businesses don’t lose value through the back door that they have worked so hard to preserve through challenging economic times.”

Damian Byrne, Forensic Director at KPMG in London and the South East

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