Fraud in the South West falls by over £28m, says new BDO report

By Anita Jaynes on 8 February, 2014

The total value of reported fraud committed in the South West fell by over £28m last year, according to BDO’s 2013 Fraud Track research, but an expert warns that the true cost to the region is much higher with the majority of cases still going unreported.

The analysis from the Bristol office of accountancy and business advisory firm BDO, which examines all reported fraud over £50,000, reports that the cost of South West fraud fell from £45.7m in 2012 to £17.6m in 2013.

The total number of reported cases in the region last year was 34, representing 6.5% of UK reported fraud. The total cost represented 2% of the UK total of £1.05bn.

Some of the most significant South West cases analysed in the Fraud Track research included:

–      An accountant in Plymouth charged with offences totalling £7.7m was jailed for six years. The offences involved duping 77 people, including football stars, into investing in a high risk spread betting foreign currency scheme

–      A solicitor and county coroner from Cheltenham charged with multiple counts of fraud and theft worth £2m, who was jailed for eight years

–      A property developer from Bath who masterminded an extensive housing fraud scheme totalling £1m to fund a holiday home project in Thailand

–      A father and son from Bristol who tried to defraud a double-glazing company of £600,000 with fake invoices and inflated fees

–      A fundraiser from Exeter who stole £561,000 collected for the Help for Heroes charity

Sat Plaha, forensic partner at BDO LLP, said: “It is surprising that that the total value of fraud is down. Usually driven by greed, the consensus view is that fraud is increasing, but it is always very difficult to quantify given the general lack of reporting of fraud across different sectors. Unless it is easy to quantify and explain in court, many frauds do not get brought to trial.”

The top three industries most susceptible to fraudulent activity in the South West were Finance and Insurance (£9.3m), Public Administration (£2.4m) and Professional, Scientific and Technical Services (£2m), while the top three types of fraud by percentage in the region were theft and cash fraud, third party fraud and tax fraud.

Sat Plaha, forensic partner at BDO LLP, said “At face value, fraud in the finance and insurance sector appears to be on the march although we need to give this context. The ever increasing regulatory and compliance burden imposed on financial services firms by the FCA and PRA means that fraud which historically may not have been reported, but rather dealt with privately in-house, is now coming out driven by a growing demand for transparency.”

Across the UK, the value of total reported fraud in 2013 has fallen by over £300m from 2012. However, the total value of reported money laundering rose by over 309% to £288m, compared to £70m in 2012. Outside of London and the South East (£591m), the UK’s biggest region for fraudsters in 2013 was the Midlands (£205m).

The 2013 FraudTrack report also shows that whilst the overall number of cases recorded continued to increase from 413 in 2011, to 416 in 2012 and 525 in 2013, the average value of frauds has continued to fall from £5.1m in 2011 to £3.3m in 2012 and £2.0m in 2013.