Source · Select Committees · Public Accounts Committee
Recommendation 5
5
Accepted
The criminal justice system’s current approach to penalising and sentencing fraudsters is insufficient to prevent...
Conclusion
The criminal justice system’s current approach to penalising and sentencing fraudsters is insufficient to prevent the UK being seen as a haven for fraudsters. Under the current system, law enforcement organisations can often spend longer investigating frauds than criminals receive as a sentence for their crime. This can have a negative impact on police morale. For crimes where the financial loss is less than £5,000, the maximum penalty is one year’s custody. Yet the majority of those found guilty receive a fine or community order. The Department acknowledges that the maximum sentence available for fraud, of up to 10 years imprisonment, is only used very rarely and needs to be used more. However, effective deterrence is not just about the length of a potential sentence, but also the likelihood of being caught. This is a major problem as less than 1% of around 900,000 frauds reported in England and Wales each year result in an offender being charged or prosecuted for the crime. The Justice Committee’s report Fraud and the Justice System, examined in depth how the criminal justice system is set up to tackle fraud.1 It makes 16 recommendations aimed at strengthening the response to fraud, including that sentencing guidelines should be amended to give greater consideration to the emotional and psychological harms caused by fraud crimes alongside the financial losses incurred. At the time of our evidence session, the Department had not yet responded to the recommendations in 1 Justice Committee, Fourth Report of Session 2022–23, Fraud and the Justice System, HC 12 Progress combatting fraud 7 the report, but this was subsequently published in January 2023. While Government recognised many of the issues raised by the Committee, its actions to address these are a work in progress. Recommendation 5: The Department should work with partners in government to address the recommendations of the Justice Committee’s report Fraud and the Justice System.
Government Response Summary
The government will address the Justice Committee's report through a new independent review, tabling a new Failure to Prevent Fraud offence under the Economic Crime and Corporate Transparency Bill, and publishing guidance on reasonable fraud prevention measures.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Target implementation date (5.3 - independent review): Autumn 2024 Target implementation date (5.4 - Guidance on Failure to Prevent Fraud offence): Spring 2025 The government response to the Justice Committee’s recommendations was published on 11 January 2023: The Justice Committee’s recommendations helped shape the Fraud Strategy, which details the steps the government is taking to fight fraud. A new independent review into the challenges of investigating and prosecuting fraud will consider a number of the Justice Committee’s concerns, including modernising the disclosure regime for cases with large volumes of digital evidence. While sentencing is a matter for the independent Sentencing Council and the courts, the review will consider whether fraud offences and the Fraud Act 2006 meet the challenges of modern fraud, including whether penalties still fit the crime. The Justice Committee also made recommendations regarding corporate accountability and the government recognises that the current law on Corporate Criminal Liability does not adequately hold organisations and their senior persons to account for offences committed by the corporation. On 11 April 2023, the government tabled a new Failure to Prevent Fraud offence under the Economic Crime and Corporate Transparency Bill. A large organisation will be liable to prosecution where fraud was committed by an employee, for the organisation’s benefit, and the organisation did not have reasonable fraud prevention procedures in place. The new offence will help to protect victims and cut crime by driving improved fraud prevention procedures in organisations and by holding organisations to account through prosecutions if they profit from the fraudulent actions of their employees. The government is giving law enforcement and prosecutors the powers to tackle organisations that defraud consumers, investors, other businesses and the taxpayer. The Bill is expected to gain Royal Assent later in 2023. The government will then publish guidance setting out reasonable fraud prevention measures before the new offence comes into force.