According to the half-year FraudTrack figures, released today by BDO LLP, reported fraud totalled approximately £920 million (1 December 2010 to 31 May 2011), compared with £1.06 billion this time last year.
The average value of a single reported fraud has also dropped to approximately £4.5 million, compared with just under £6 million this time last year. This is the most significant drop in four years yet, with 205 reported cases, also represents the highest number of reported incidents.
For BDO's experts, the figures indicate a disparity between how fraud is being tackled in the private and the public sectors. Whilst fraud reported by those in public administration has almost doubled since last year (from approximately £216 million in 2010 to £431 million in 2011), fraud reported in the finance and insurance sectors has almost halved in the same period (from around £524 million in 2010, to £274 million in 2011).
Public administration cases now represent 46% of all reported fraud in the UK.
In terms of types of fraud reported, procurement fraud - often anecdotally referred to as the most common type of fraud - was only reported twice within the period, compared with theft and cash fraud, which was reported 59 times.
Simon Bevan, head of fraud services at BDO, said: "What's particularly interesting about these figures is that they don't necessarily correlate with what we're seeing in the market. Having worked through two recessions, my experience is that fraud is more likely to be uncovered in these market conditions. Do these figures indicate that less fraud is happening? Not in my view. Rather, we think this represents a reluctance to report fraud to the authorities, particularly in the financial services sector. As the old adage goes, '90% of fraud goes unreported' - so this isn't particularly surprising. The fact is that many people who fear that reporting fraud will lead to bad publicity also question whether reporting fraud to the police or SFO is the most effective method of dealing with it. We believe this is a key reason why reported fraud figures are down.
"What's likely is that more and more organisations in the financial services sector are finding a different method for tackling fraud. They will most likely be taking the view that the civil approach means they are more likely to recoup lost money and less likely to risk reputational damage.
It's important to note the context in which we've conducted this research. The figures come at a time of stretched police resources and increasing uncertainty about the scope and role of regulators such as the SFO and FSA. Our regulators are doing their best to work with what they have, but this uncertainty is not lost on UK plc."
"It's well known that the majority of fraud committed in the UK is procurement fraud, yet this is not what we're seeing in terms of reported figures. What these figures indicate is that entities are self-selecting which fraud they report. If it's a simple cash fraud, it seems that organisations are more likely to go the police, yet with a complex procurement fraud they are choosing to deal with the issue internally."
