The total value of fraud in the South West has halved since this time last year, with the region now seeing the lowest level of fraud in Great Britain.
In total, the South West saw just £3m worth of fraud in the last six months. The highest rate of fraud in Britain was in London, with an estimated cost of £768m over the last six months. The North East (incorporating Yorkshire) also suffered very high rates at £95m. In 2008 fraud worth over £15 million was committed in the South West.
Businesses should not be complacent, however, warned Jim Brown of Bristol’s BDO Stoy Hayward:
“History suggests that fraud will rise as a result of the recession and we should beware the national rate of fraud growth, which has nearly doubled to £1.2bn.
“There is a whole wave of commercial lending fraud that is yet to crash around the ears of UK and overseas banks and the South West will not be immune.” Jim warned. “Furthermore, I think these figures are only part of a bigger picture – many cases of fraud do not make it to court and therefore aren’t captured in these figures.”
Jim suspects that there is increasing risk of management ‘cooking the books’ and that we should be very wary of mortgage fraud:
“What a lot of these mortgage frauds have in common is the over valuation of property prices which has been exposed in the recession”. I am not at all surprised that real estate fraud is now at £97m. What really surprises me is that the figure is so low. We know from experience that banks, property companies, housing associations etc that are hit by property frauds are very unlikely to go to the criminal courts.”
However, on face value it is a surprise to see that procurement fraud dropped in the last six months. According to BDO this should not be a surprise. Jim explained:
“As a recession starts, organisations focus on cost reduction and reducing their procurement spend which leads to an initial reduction in such frauds. However as the recession deepens, and persists, management start looking for ways to make recoveries. They start mining their procurement data which may lead to more procurement frauds coming to light this time next year.”
Regardless of the sector, business leaders should keep an eye out for fraudsters. “No-one is immune from the problem. All firms should increase their fraud awareness during these difficult economic times.”
