Source · Select Committees · Public Accounts Committee
Recommendation 17
17
Accepted
In October 2022, our sister Committee published its report, Fraud and the Justice System.
Recommendation
In October 2022, our sister Committee published its report, Fraud and the Justice System. This examined in depth how the criminal justice system is set up to tackle fraud. It concluded that a wholesale change in philosophy and practice was needed which was more aggressive in investigation, prosecution and conviction, and much more focused on the impact of fraud on victims. It made 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. It also made recommendations around disclosure guidelines, and the introduction of a ‘failure to prevent’ offence for fraud. At the time of our session, the Department had not yet responded to the recommendations in the report.35 The Government responded to the Committee’s report in January 2023. This included its commitment to continue to work closely with partners to consider how further improvement could be made to disclosure guidance, and that the forthcoming fraud strategy would detail its aim to ensure that the disclosure regime meets the needs of complex fraud cases. Similarly, Government recognised that the current law on Corporate Criminal Law does not adequately hold organisations and their senior persons to accounts for offences committed by the corporation and their associated persons. It explained that Government was working to consider the Law Commission’s review of the issue published in June 2022 and its options for reform in order to determine a case for strengthening the law on corporate criminal liability, including the creation of an offence for failure to prevent fraud. On sentencing guidelines, the Government explained that the independent Sentencing Council was responsible for developing sentencing guidelines and it was therefore for the Council to respond to this recommendation, confirming that Government had shared
Government Response Summary
The government agrees and will address the Justice Committee's report Fraud and the Justice System through a new independent review into the challenges of investigating and prosecuting fraud, and by tabling a new Failure to Prevent Fraud offence under the Economic Crime and Corporate Transparency Bill.
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.