The total value of reported fraud has risen to a five-year high of £2bn, BDO analysis shows.
Top Ten firm BDO found in its analysis that the number of cases has fallen, compared to 2015, but that the average cost of fraud has risen 35.4% to £3.9m, and the total increased 31.5% to £2bn in 2016.
BDO FraudTrack’s analysis examined fraud cases over £50,000 in the UK, and found that the total number of reported cases fell to 504 in 2016 from 519 in 2015.
Kaley Crossthwaite, partner and head of fraud at BDO, said: “It is extremely encouraging to see that the public and regulatory scrutiny within financial services is starting to gain some traction in reducing the volume and value of reported fraud.”
The financial services sector saw a drop of 62% from 2015-16 in the number of fraud cases, and that London, the South East and the Midlands are at the biggest risk of fraud. From a volume perspective, London & the South East had 159 reported cases (31.6% of all cases) followed by the North West with 73 and the West Midlands with 53 cases.
Yet, fraud in public administration increased 204%, with the number of cases climbing to 150 from 114 in 2015, accounting for £1.4bn of the UK total. The rise is due to a single £1bn VAT “carousel fraud” case involving a woman from York.
Crossthwaite added: “As with last year, the numbers have been skewed slightly due to a small number of very large cases. Removing these anomalies would show an apparent fall in both volume and value year-on-year. However, this would not give us the full picture. Our experience would suggest that both volume and value in real terms continue to rise despite efforts by companies to strengthen their processes.”
Fraud against individuals is the most common type of activity, accounting for 30% of all reported cases. The analysis of the reported fraud cases in 2015 and 2016 revealed the majority of cases continue to target the elderly and vulnerable.
Money laundering showed the biggest decrease in fraud value falling to £99m from £201.6m in 2015, yet the number of cases rose slightly.
Mortgage fraud fell from £151m in 2015 to £55m last year, while third party fraud fell from £209m to £47.6m.
Crossthwaite concluded: “Sadly, the findings of this research are just the tip of the iceberg and many frauds continue to go on undetected. In many instances, even when they are picked up, corporates prefer to resolve the situation privately to avoid the public scrutiny that comes from going to court.”