Fraud is the most common offence in the United Kingdom. The scope and depth of the issue are difficult to fathom, with a recent BBC article claiming that it costs the UK £2300 every minute.
With the proposed creation of a new ‘failure to prevent fraud’ offence, the government seeks to increase accountability for large organisations that profit from fraud committed by their customers (you can find the updated factsheet on Gov.com). Curiously enough, SMEs (small and medium-sized enterprises) are to be exempt.
The new law will likely come into effect near the latter end of 2024 as part of a corporate liability reform, a major change that will extend the scope of individuals responsible for corporate criminal liability, specifically senior employees.
What Does This Mean for UK Businesses?
Ultimately, the law will make it easier to prosecute corporations who commit economic offences. In many respects, the reforms represent a continued paradigm shift in the corporate arena, a rising trend against growing concerns regarding corporate responsibility and ESG (Environment, Social, and Governance).
We saw a similar change in the US back in June – the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency released a joined statement outlining their final guidelines for third-party risk management in banking, raising the standards in the name of consistency, accountability, and transparency.
Complex regulatory change results in a new set of challenges for any organisation, not least of all in the talent space. In the case of the UK, businesses must ensure they have the right people and policies in place to navigate transformation.
Decision-makers must protect their business, customers, and employees from fraud, an impossible task without the relevant skillsets. Herein lies the issue: Sourcing, attracting, and retaining incredible people.
Why Are SMEs Exempt?
The justification for the exemption of SMEs is that it will ‘avoid disproportionate burdens,’ on smaller businesses which often bear the brunt of fraud’s impact from larger players. SMEs will remain accountable to the existing laws, but part of the reasoning behind the reforms is to avoid doubling up on anti-fraud policy.
Will this mean that dealing with SMEs incurs an added layer of risk in the future? Businesses with the exemption could be an easier target for fraudsters, and it may develop an unhealthy narrative about the way the UK approaches financial crime.
That said, the changes are welcome in many respects, marking the start of a safer, more responsible era of business.
Fraud prevention and Risk Management jobs are changing alongside the evolution of modern legislation. Our corporate partners at the International Compliance Agency have a superb article outlining the investigatory nature of these roles – check it out here.
Here at Broadgate, we specialise in connecting the right people, with the right opportunity, at the right time. We do this via our community-led approach to recruitment. We know that fraud presentation has a distinctly international element to it, which is why we lean on a global talent network to ensure that we create access to the best candidates.
If you’re hoping to secure the future of your business, our talent solutions can be the difference you need to thrive in a new regulatory era.