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Investigating Fraud – Who is Responsible for Prosecuting It?

At present there is a greatly fragmented group of organisations responsible for investigating fraud and its prosecution within the UK. This results in a lack of cohesion in the approach and many potentially successful fraud cases brought against serious fraudsters have collapsed as a result of the lack of communication between the many fraud agencies.  There is no doubt that many more modest frauds have gone un-investigated because of this lack of joined up thinking.

In West Germany fraud is now handled by a specialised prosecution unit comprising prosecutors, forensic accountants and “business administration experts” with some success.  The recently formed National Fraud Authority (NFA) has not yet turned its attention to the delivery of a coherent and central fraud prosecution policy. However, there is a will to unify the fraud prosecution resources with the UK that was apparent back in the 1980s shown by the government’s Roskill Committee on Fraud.  It proposed the need for a new unified organisation responsible for all the functions of detection, investigation and prosecution of serious fraud cases.  Limited success of this was seen with the setting up of the Serious Fraud Office – but this only handled a small proportion of the more newsworthy frauds – often with controversial results.

The need for a unified approach is still being lobbied, by bodies such as the Fraud Advisory Panel, the Association of Chief Police Officers and by many of the diverse investigation agencies. At present in 2010, the following agencies have primary responsibility for the prosecution and investigation of fraud:

  • The Serious Fraud Office – the SFO investigates and prosecutes the most serious and complex frauds – or those having a significant level of public interest. It uses its own prosecutors (lawyers) and investigation teams and usually works alongside police officers and other external specialists.
  • The Crown Prosecution Service – the CPS prosecutes frauds through two divisions: general fraud through its Fraud Prosecution Division (FPD) that has been investigated by police forces or the Serious and Organised Crime Agency (SOCA) and tax based frauds through its Revenue & Customs Division (RCD) that has been investigated by HMRC or SOCA.
  • The Department for Business Innovations and Skills (BIS – formerly DTI/BERR) spends its time investigating fraud – and prosecutes it through the Insolvency Service and the Treasury Solicitor.  Company frauds and disqualification of directors are investigated by both the Insolvency Service and its specialised agency – Companies Investigation Branch.
  • The Department of Works and Pensions (DWP) investigates and prosecutes benefit fraud, including organised gangs of benefit fraudsters.
  • The Financial Services Authority(FSA) investigates and prosecutes abuse within the finacial services system, including the banking sector, insurance and other financial providers. Major frauds would include insider dealing and market abuse.
  • Public Sector– Local Government carry out their own internal investigation and prosecution in areas such as corruption and procurement fraud. Other public bodies such as the Ministry of Defence (MOD) and National Health Service (NHS) also investigate and prosecute internal cases of corruption and procurement.
  • Trading Standards (TS) – These agencies are situated within the large number of councils around the country and are responsible for investigating and bringing prosecutions in all areas of consumer fraud and other mass market frauds.
  • The Office of Fair Trading (OFT) – investigates and prosecutes major cartels.

Thus there is a plethora of organisations currently having the responsibility for fraud.  As can be seen by the merger of the HMRC prosecution function with the CPS there si some move towards unification – even if this move was more of a cost cutting excercise following the public sector funding cutbacks impacting in 2009/10.