Source · Select Committees · Public Accounts Committee
Recommendation 16
16
Accepted
Under the current sentencing guidelines, fraud carries a maximum sentence of 10 years imprisonment, or...
Conclusion
Under the current sentencing guidelines, fraud carries a maximum sentence of 10 years imprisonment, or for crimes where the financial loss is less than £5,000, a maximum of one year. However, the majority of those found guilty of crimes with a loss under £5,000 receive a fine or community order instead of the one year prison sentence available.32 The Department acknowledged that the maximum sentence permissible for crimes with a loss over £5,000 is only used “very rarely” and needed to be used more. The NCA told us that law enforcement can often spend longer investigating a fraud than the convicted criminal is sentenced to, and there can be a feeling of “hopelessness” in investigating and prosecuting fraud cases. It told us that police were now trying to ensure statements provided by victims of fraud captured not only the financial loss incurred but also the impact of that loss on the individual and the potential psychological damage it may have caused to help judges take informed decisions on sentences.33 The NCA also told us that one of the reasons there was so much fraud in the UK compared with other countries, was that there was not much chance of being caught. Of around 900,000 frauds reported each year in the England and Wales, currently less than 1% result in a criminal justice outcome. The NCA argued that forming an effective deterrent for criminals is not only about the length of sentences but also the likelihood of being caught, and recognised that both needed to be addressed.34 29 Q 114 30 Qq 31, 41, 114 31 Q115 & Home Office, The Strategic Policing Requirement, February 2023 32 Justice Committee, Fourth Report of Session 2022–23, Fraud and the Justice System, HC 12 33 Qq 53, 64 34 Qq 46, 65 14 Progress combatting fraud
Government Response Summary
The government agrees with the Committee’s recommendation and will publish guidance on the Failure to Prevent Fraud offense in Spring 2025. There will also be a new independent review into challenges of investigating and prosecuting fraud.
Government Response
Accepted
HM Government
Accepted
5. PAC 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. 5. PAC recommendation: The Department should work with partners in government to address the recommendations of the Justice Committee’s report Fraud and the Justice System. 5.1 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 5.2 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. 5.3 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. 5.4 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.