The public sector lost almost twice as much to fraud in the six months to May this year compared with 2010, a report has found.
Stretched police resources and uncertainty over the future of regulators have contributed to a rise of almost £200m, bringing the total lost between December 2010 and May 2011 to £431m.
In contrast, fraud in the private sector fell from £844m to £489m in the same period. This meant the overall amount lost to fraud in the UK fell to £920m at the end of May, compared with £1.06bn in the same period last year.
The figures, published in consultancy BDO’s six‑monthly FraudTrack report, show a ‘disparity’ between the public and private sector’s approach to tackling fraud, said BDO’s head of fraud services, Simon Bevan.
In the private sector, the finance and insurance sectors are ‘leading the way’ by deciding to deal with the issue using civil, rather than criminal, means. Fraud in these sectors has halved from around £524m to £274m.
‘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.’
Bevan said it was ‘important to note the context in which we’ve conducted this research’ when comparing the public and private sector.
‘The figures come at a time of stretched police resources and increasing uncertainty about the scope and role of regulators such as the Serious Fraud Office. Our regulators are doing their best to work with what they have, but this uncertainty is not lost on UK Plc.’
He added that some of the fall in private sector fraud was likely to be as a result of an unwillingness to report it.
‘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. 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.’
