Fraud in the North West halves in 2018 to £51.9m

Research carried out as part of BDO LLP’s annual FraudTrack report shows that the value of fraud in the North West fell 55.1% from £115.7m in 2017 to £51.9m in 2018.

Accountants and business advisers BDO found that while fraud in the public administration, and real estate, rental and leasing sectors decreased in the region over the past year, the health care sector was a target for fraud in 2018. One notable case involved the Mersey Care NHS Foundation Trust, which runs Merseyside’s mental health and community care. The Trust was a victim of a sophisticated scam involving a fake invoice being filed for payment in the region of £1m.

The total value of fraud UK-wide more than halved in 2018. Following a record 15-year high in 2017, reported fraud fell from £2.1bn to £746.3m. This is the lowest level of fraud since 2014 when the value fell to £720.3m, however experts at BDO say the true cost of fraud to the UK could be as high as £37.5bn.

Alex Marsden, Partner at BDO commented: “While fraud in the North West halved in 2018, the region is still the third most defrauded region in the UK by value.

“Our experience suggests that as few as one in 50 cases of fraud in the UK are likely to be reported so the figures only shine a spotlight on the visible part of a much wider problem.

“In an era of increasingly sophisticated frauds, scammers prey on established systems and transactions. The payment of fraudulent invoices is just one example of where strict due diligence processes must be put in place and regularly reviewed. Having clear policies and robust third-party verification processes in place is paramount to managing risk effectively.”

Regional hotspots

Yorkshire took over from the West Midlands in 2018 as the largest hotspot for fraudsters outside London, with a 51.2% increase to £52m. This large increase is due in part to a significant jump in the value of third-party fraud (315.6%) in Yorkshire with the average value of fraud increasing by 51.2% to £1.3m up from £860k. The North West was the third most defrauded region in the UK by value with 55 cases of fraud reported over the past year. The North East by comparison only had 26 cases of fraud reported in 2018.