BDO’s Fraudtrack report has revealed the largest increase, 76%, in reported fraud ever to take its value through £2bn in 2009. Wow!
That’s a lot of fraud (read our story here). The average size of a fraud is at an impressive level too at £5m.
Truth is though that this is “reported” fraud. Not all of it. There’s much more going on than that which means plenty out there for the accountancy fraud teams to investigate. But that’s not me telling me anything you didn’t know. Also we shouldn’t be too surprised by a steep increase in fraud during a recession. Crises tend to bring out the worst in people. Desperate people are driven to desperate measures.
But people will also follow where they are led. If others are doing it people will always conclude for them to do it to.
Take the property fraud BDO expects. They predict people will overstate the value of property as security to raise loans.
But the banks largely don’t deal with that as fraud, they deal with it as a bad loan.
If that’s the kind of mindset among the victims well, they’re going to get hurt.
But with such a large increase in reported fraud we can assume also that there must have been a significant increase in unreported and undetected fraud. That’s a guess of course, but if the assumption is correct you have to wonder to what extent the UK is becoming a nation of fraudsters. It sounds ludicrous. We’re a country of people who follow rules and regulations. Isn’t our complaint about the EU that it’s alright passing all those laws, but the British are the only ones who take them seriously?
But the fraud figures point to something else. It points to a country where people increasingly feel they are owed and they can push the boundaries.
At the weekend my barber told me he was a bit of property developer in the eighties and that everyone who developed applied for “first-time buyer” mortgages on preferential terms, no matter what there position. Even his lawyer he said bought “five” flats and each time told mortgage companies he was a first-time buyer. “Everyone was doing it,” he said. From the BDO report, seems like everyone’s doing it now too. It many different ways.
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