RiskUKDecember2017

Annual Fraud Indicator 2017 highlights UK
footing colossal £190 billion fraud bill
Authority (NFA), which had established the
concept and experimented with a variety of
methodologies. The NFA published four
detailed reports, the last of which was in 2013.
The NFA was abolished in 2014 leaving a gap
in the measurement of the cost of fraud to the
UK: a gap that the partners in this project were
very much keen to fill. The partners wanted to
build upon the work of the NFA by offering the
same detailed estimates of the cost of fraud to
the UK, while also using a more developed and
consistent methodology to allow dependable
comparisons over time.
The annual cost of
fraud in the UK is £190
billion, which is equal
to around £10,000 per
family. That’s one of
the main findings of
the Annual Fraud
Indicator 2017
published by Crowe
Clark Whitehill and
developed in
conjunction with both
Experian and the
Centre for Counter
Fraud Studies at the
University of
Portsmouth. Brian
Sims reports on this
year’s statistics
The 28-page Annual Fraud Indicator (AFI)
2017 highlights the colossal cost of fraud to
the UK’s economy. Unless an organisation
truly understands the nature and cost of fraud
affecting it, how can it possibly apply the right
and proportionally resourced solution? How can
it begin to track progress in reducing the
prevalence and cost of fraud? Lastly, how can it
understand the value derived from its
investment in countering fraud?
The AFI has been developed to help create a
benchmark by which, year-on-year, a sectorspecific
analysis can be made.
An in-depth analysis of fraud levels in the UK
economy shows that annual fraud losses are
presently indicated to cost £190 billion, private
sector losses are estimated to be £140 billion,
public sector losses are estimated to be £40.4
billion, charities and charitable Trusts are
believed to be losing £2.3 billion and frauds
committed directly against individuals are
estimated at around the £6.8 billion mark.
These numbers are far from insignificant.
With the latest National Audit Office and
National Crime Agency statistics confirming
that fraud has surged to the top of the list of
commonly committed crimes, now is the time to
identify and measure its cost such that
businesses, Government bodies, charities and
individuals alike can understand the value of
their investment in countering fraud.
In 2016, the UK Fraud Costs Measurement
Committee published its first AFI. The 2016 AFI
built on work undertaken by the National Fraud
Team and methodology
The research team for this year’s AFI was led by
Professor Mark Button, director of the
University of Portsmouth’s Centre for Counter
Fraud Studies, and included David Shepherd
and Dean Blackbourn. The methodology used
has been developed in line with the
groundbreaking work of the NFA.
“The £190 billion cost of fraud represents
more than the UK Government spends on
health and defence combined or all welfare
payments excluding pensions,” explained
Professor Mark Button. “In the public sector
alone, with fraud losses of £40 billion, this is
equivalent to what we pay in national debt
interest or spend on defence. This report shows
that there are clear differences in the strengths
and risks of fraud in the different sectors of the
UK economy. The thin resources of the State
dedicated to fighting fraud mean that, for most
organisations and individuals, the best they can
do is protect themselves. Investing in the
appropriate strategies to increase their
resilience to fraud is the most effective way in
which to reduce the risk of fraud occurring.”
Nick Mothershaw, director of fraud and
identity solutions at Experian, stated in
conversation with Risk UK: “This year’s report
highlights how the continued growth of
procurement fraud remains a great problem for
many businesses. Most often, it’s the
employees who are instrumental in such fraud.
On that basis, vigilance and appropriately
vetting staff should be a high priority for all
businesses. Making sure you employ the right
people and that your existing staff members,
and particularly those in positions of
responsibility, are not under duress will help
you to avoid potentially costly losses.”
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