A rise in the number of so-called “super cases” has led to the value of alleged fraud breaking the £1bn barrier in 2016, which is apparently the first time since 2011 that fraud has reached this level.
The figures were revealed in the latest Fraud Barometer from KPMG, which measures fraud cases with losses of £100,000 or more reaching the UK courts. The analysis shows that whilst the volume of alleged fraud for the year has dropped by nearly a third from 310 to 220, the value was up over 55% on last year’s £732m - this year saw £1,137m of alleged fraud hitting UK courts.
As a result, the average fraud value more than doubled, from £2.4m to £5.2m. 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.
Rise in “Super cases”
According to KPMG, this rise in fraud value can be attributed to the number of “super cases” during the year, which are cases where the value of the alleged fraud is £50m or more. In 2016, over £900m derived from just seven super cases, whereas in 2015 these cases accounted for just £250m.
KPMG says that the surge in super cases 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.
Law Enforcement Agencies Struggling
“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,” explained Hitesh N Patel, UK Forensic Partner at KPMG.
“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,” he added. “This places much more emphasis on businesses and consumers to protect themselves from fraudsters who will take advantage given the opportunity.”
FFA UK Figures
The rising fraud figures revealed by KPMG have been echoed by Financial Fraud Action UK (FFA UK), which released data showing a 25% increase in financial fraud during the first half of 2016. This rise was apparently primarily enabled by scams and online attacks.
Despite these losses, the security systems employed by banks managed to prevent the majority of fraud from taking place, says FFA UK, with prevented fraud totalling £678.7 million. This is equivalent to £6 in every £10 of attempted fraud being stopped.
Total financial fraud losses across payment cards, remote banking and cheques were £399.5 million in the first half of the year, a 25% increase on the same period in 2015, when total losses were £320.3 million.
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