Warning to businesses as fraud bill hits £85bn
The British economy is losing £85.3bn every year to fraud, according to a new report.
The estimate is far higher than official estimates and highlights the damage fraud is causing to the UK economy.
Accountancy firm BDO, which compiled the research, said fraud remains a “challenging and expensive problem” which leads to “less financially stable and profitable companies” as well as “reduced job security and lower disposable incomes for us all”.
The report is being published just days after 12 men were arrested for allegedly trying to take control of Santander’s computers to steal millions of pounds from the bank.
BDO said the report is one of the most detailed studies in the world about the total cost of fraud.
The UK figure has been calculated by studying fraud data from around the world over the last 15 years and establishing what percentage of the world’s GDP is being lost to fraud.
The report says that 5.47pc of GDP is now being lost to fraud, up by 20pc compared with the average loss of 4.57pc between 1997 and 2007.
Jim Gee, director of counter fraud services at BDO, said the most common forms of fraud involved procurement and payroll for businesses. Examples include services and goods not being supplied after payment, or companies being overcharged.
Mr. Gee said fraud remains “the last great unmanaged business cost”.
He stated: “Assessing the true cost of fraud, as opposed to the cost of reported fraud, presents some very scary numbers. Putting in place pre-emptive measures could make very significant improvements to the financial health and stability of UK plc.
“Fraud remains a challenging and expensive problem, and its economic effects are clear – affected public services, less financially stable and profitable companies, reduced job security and lower disposable incomes for us all. The financial crisis, where fraud has risen significantly, has clearly provided the ideal conditions in which fraud can grow.”
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