The first time since 2011 that fraud has exceeded the £1 bilion barrier, due to a resurgence in 'super cases'.
The value of alleged fraud reaching UK Courts broke the £1 billion barrier in 2016, due to a resurgence in 'super cases', cases where the value of alleged fraud is £50 milion or more. This is the first time since 2011 that alleged losses from fraud has exceeded £1 billion.
The KPMG Fraud Barometer found that while the volume of alleged fraud for the year has dropped by nearly a third from 310 cases to 220, the value was up over 55 percent on last year’s £732 million - this year saw £1,137 million of alleged fraud hitting UK courts. Consequently, the average value of fraud has more than doubled to £5.2 million from £2.4 million. Fraud against businesses was up seven-fold this year with internal fraud committed by employees and management the most common type of fraud to hit businesses.
Super cases - a mirror to the economy?
The figures include over £900 million derived from just seven super cases. The surge in super cases, from £250 million last year, may be a reflection of fraud becoming a more lucrative and practical proposition for those with the right skills and technology, or those in senior commercial roles. Increased pressures both to deliver on targets in a highly competitive and uncertain environment and to preserve personal finances have made people more willing to disregard their moral compass and see fraud as a shortcut to success. Combined with this are new opportunities for fraud that have largely been created by new technology.
The latest findings also show a picture reminiscent of recent economic fortunes. As the economy has slowly recovered from the financial crises, businesses and individuals have shown an increased appetite to spend or invest more. That money is now falling into fraudsters’ sights. At the other end of the spectrum, as austerity continues to pinch many, some employees and consumers are adopting less than legitimate means to maintain lifestyles.
“The figures for 2016 tell us two things. Firstly, that we can expect more of these super frauds as challenging economic circumstances place pressures on businesses and individuals and as technology becomes more sophisticated. Secondly, that this is going to put even more strain on law enforcement agencies who don’t have the resources to investigate every report of fraud that they receive: getting the large, often cross-border and complex frauds to court is extremely time consuming and resource intensive. This places much more emphasis on businesses and consumers to protect themselves from fraudsters who will take advantage given the opportunity.”
Hitesh N Patel, UK Forensic Partner at KPMG