The total value and volume of reported fraud in 2017 hit a 15-year high, at over £2bn, with substantial increases in fraud in the financial services sector, according to research by BDO.
The firm’s analysis of reported fraud cases over £50,000 in the UK reveals the total value has risen 538% to £2.11bn over the last 15 years, and is up 6.5% from £1.99bn in 2016.
The volume of reported fraud has shown similarly high levels of increase, up 172% since 2003, when there were 212 cases, to reach 577 cases currently. The average value of fraud has also risen by 133% to £3.66m from just over £1.5m in 2003.
However, the pace of growth in the value of fraud has slowed considerably in the last twelve months increasing by 6.5% compared to 31.5% in 2016.
In the last year, the financial services sector has witnessed the largest increase as the total number of cases rocketed by 72.4% and the value of fraud has risen by 318.8% to £899.7m.
BDO reports another dramatic increase in 2017 occurred in the charity sector, with the value of fraud rising over 300% to £8.5m, up from £2.1m in 2016, as the number of reported cases almost doubled.
In contrast, public administration fraud saw a 73.2% drop in value to £368.5m from £1.37bn in 2016. This was due in large part, however, to the absence of a single £1bn VAT ‘carousel fraud’ case that occurred in 2016.
The greatest increases over the past 15 years have occurred in real estate, rental and leasing fraud, with the total value shooting up to £276.5m from £1.08m, and retail trade fraud, which has grown from £15.5m to £337.3m.
Kaley Crossthwaite, partner and BDO’s head of fraud, said: “While a significant amount of fraud still goes unreported, our research suggests that people are becoming a lot more courageous in coming forward to report it and recovering their assets through the criminal or civil justice systems.”
“There is now an expectation that fraud will be reported and investigated, both internally by corporations, charities, public sector entities and companies operating within regulated sectors. Stakeholders are seemingly no longer content to simply sweep fraud under the carpet in the hope that it will all go away.”
BDO says greed remains the greatest driver of fraud across the UK with 18.9% of cases stemming from human avarice. After greed, gambling and debt were the largest contributing factors to reported fraud with 33 and 19 cases respectively out of a total 577.