COVID-19: Bounce Back Loan Scheme

Government’s plans for managing risks to the taxpayer—from both fraud and borrowers who are unable...

Government’s plans for managing risks to the taxpayer—from both fraud and borrowers who are unable to repay loans—are woefully under-developed. Government does not have a counter-fraud strategy for the Scheme and has not identified what types of fraud it will prosecute. The Bank does, nevertheless, have a weekly lender fraud … Read more Government’s plans for managing risks to the taxpayer—from both fraud and borrowers who are unable to repay loans—are woefully under-developed. Government does not have a counter-fraud strategy for the Scheme and has not identified what types of fraud it will prosecute. The Bank does, nevertheless, have a weekly lender fraud prevention collaboration working group, and conducts ‘data- analytics’ work with the Cabinet Office. Equally, lenders are required to conduct counter-fraud, anti-money laundering and ‘know your customer’ checks on loan applications. The Bank believes that these checks have prevented around 27,000 fraudulent loans that represent £1.1 billion but it has no data on Scheme fraud levels. Nor does it have any information on how businesses which have received loans have used the proceeds. The Bank say it will look into this during 2021, which may therefore be after the Scheme closes. The lack of data undermines the Bank’s ability to monitor and report levels of fraud and to use information to better inform future schemes. Recommendation: The Department needs to provide clear updates on how it intends to deal with different cases of fraud, including on how it will prioritise recovery and prosecution. British Business Bank should write to the Committee, within two weeks, with a report on the latest fraud estimates in the existing portfolio. Show less